Intel shares fall the most in 50 years

Shares of the US chipmaker had their worst session since 1974, after announcing a loss in the second quarter and a plan to lay off huge numbers of employees.

At the close of trading on August 2, Intel shares fell 26% to $21.48. This was the worst session for the stock since a 31% drop in July 1974. In total, the stock has fallen 30% in the last two sessions. Intel's market capitalization is now below $100 billion.

Intel shares fell after the company reported a disappointing financial report. Intel reported a loss of $1.61 billion in the second quarter, far below analysts' forecasts. The company had a profit of $1.48 billion in the same period last year. Revenue for the second quarter was $12.8 billion, down 1% from last year and also missing expectations.

Intel stock price performance over the past month. Chart: Google Finance

Intel said it would not pay a dividend in the fourth quarter of this year and would lay off more than 15% of its workforce as part of a $10 billion cost-cutting plan. The layoffs could begin as early as this year.

"This is Intel's most dramatic restructuring in more than 40 years. We have set out a bold path to rebuild the company and we will do it," Intel CEO Pat Gelsinger said on CNBC on August 2.

Intel used to be the largest chip maker in the US , but in recent years it has been gradually surpassed by competitors such as Nvidia, Qualcomm, Broadcom, Texas Instruments and AMD. Analysts say Intel has been quite slow in the AI ​​race, causing its market share to gradually fall into the hands of other companies.

Intel’s restructuring plan is also expected to take years. The company is currently not capable of shaking TSMC’s world leadership position. In addition, the US revocation of its export license to China in May also affected Intel’s business in the world’s most populous market.

Another reason for Intel and other chip stocks to fall on August 2 was the news that Nvidia is under antitrust investigation by the US Department of Justice (DOJ). The Information reported that the DOJ is looking into allegations that Nvidia has abused its dominance in the AI ​​chip sector.

“For decades, we have competed by investing and innovating, following the law, being open and ensuring our customers have the choice of what is best for them,” said an Nvidia spokesperson, adding that Nvidia “will provide all information necessary to the authorities in their investigation.”