AMD and Intel suffer from the collapse in the sale of PCs after the pandemic

The drop in computer sales it has provoked the prudence of many research firms on many companies on the stock market. The sale of PCs in the third quarter of the year fell almost 20% compared to the previous year, the largest decline in decades and the fourth consecutive quarter of declines compared to data from a year ago.

The rise in PC sales generated by the pandemic and the radical change due to the rise of hybrid or remote work has ended and no longer adds to computer sales, but rather begins to subtract. shopping for the back to school they also showed in the United States “disappointing results, despite such large promotions and price drops, due to lack of need, as many consumers had bought new computers in the last two years”, according to Mikako Kitagawachief analyst of Gartner.

On the business side, geopolitical upheavals, such as the war in Ukraine, and economic uncertainties “led to more selective spending on technology, and PCs were not high on consumer priority lists”Kitagawa adds. This is a situation that affects some companies with regard to their upcoming results and prospects for the following quarters.

Thus, semiconductor analyst Stacy Rasgon significantly lowered his price target for shares of Intel and of Advanced Micro Devices, due to this clear deterioration in demand. The outlook for PC sales has deteriorated throughout 2022.

A historic decline following the boom of the pandemic

According to IDC, global PC shipments fell 15% in the quarter ended in June compared to the previous year, following a year-on-year decrease of 5% in the second quarter of the year. October 10th, the consultant stated that PC shipments in the third quarter of the year also fell by 15%. Globally, PC shipments fell 19.5% in the third quarter of 2022, the biggest drop since Gartner began tracking sales in the mid-1990s.

And how does it directly affect companies? as commented RasgonIntel’s strategy is “built on a shaky foundation that is now collapsingas PCs are likely to return to pre-COVID levels in the near future.” The company “has been publicly admitting to essentially weakening its stock and we suspect that things have gotten even worse since they made those comments.”

The analyst of Bernstein He reiterates his assessment that Intel will underperform the market and lowered his price target from $30 to $23. Considers that there is still a discount to be produced in its price, despite the path it is taking on Wall Street: their stocks have lost more than 59% from highs. Meanwhile, he reaffirms his neutral recommendation for AMD, although he lowered his price target to $95 from $135.

Last month, Intel’s chief financial officer, David Zinsner, told Rasgon that the PC market has “deteriorated even further,” according to the latest report. Y AMD warned in early October that it would miss its financial forecasts. for the third quarter of the year, citing weaker-than-expected PC demand. Intel and AMD use the x86 chip architecture to manufacture the processors that act as computing brains for PCs and servers.

With everything, Rasgon is more optimistic regarding AMD’s future once the chipmaker overcome the current weakness related to the global macroeconomic situation. “Unlike the problems with its largest competitor (Intel), AMD’s problems do not appear to be structural,” he writes. “We suspect that the company will continue to have a significant stake in the (data center) segment as they take advantage of Intel’s stumbles… the long-term story still looks favorable,” he adds.