Semiconductor major Intel Corporation (NASDAQ: INTC) is planning to reduce near-term spending, due to the prevalent global economic situation.
Shares of the company declined 5.3% to close at $41.19 in Wednesday’s extended trading session.
Spending Concerns
Even though the company remains confident about the long-term growth prospects of the semiconductor industry, the chip maker is of the opinion that the prioritization of spending will help it “weather macroeconomic uncertainty, execute on strategy and meet commitments to customers, shareholders, and employees.”
To that end, the company is going for a temporary hiring freeze at its Client Computing Group, which provides chips for laptops.
Laptops have been witnessing a dwindling demand scenario off late, due to Covid-induced lockdowns in China. Moreover, market-research firm International Data Corp (IDC) expects shipments of traditional PCs to fall 8.2% from last year’s level to around 321.2 million units. Prior to the lockdowns in China, IDC had forecast a decline to 346 million units.
However, Intel’s $100 billion expansion plans in the U.S. and Europe remain on track.
Management’s Take
The CEO of Intel, Pat Gelsinger, said, “We’re going to go through some choppiness for sure in the near term as everyone else will as well. What we’ve got to do is, kind of, keep our heads down and drive the business, execute to the plan and things will have good outcome for us.”
Stock Rating
Overall, the stock has a Hold consensus rating based on five Buys, nine Holds and six Sells. INTC’s average price target of $51.12 implies upside potential of 24% from current levels. Shares have declined 27.7% over the past year.
Investors’ Stance
TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on INTC, as 8.8% of the top portfolios tracked by TipRanks increased their exposure to the stock over the past 30 days.
Conclusion
Like other technology companies, Intel, too, has been hit hard by the economic uncertainties of the world, including muted demand. The company’s plans of reducing its expenditure in a bid to protect its margins seem to be prudent.
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