AMD and Intel say demand for PCs is getting ‘worse’. That’s bad news for chip stocks.


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Intel headquarters in Santa Clara, California.

David Paul Morris/Bloomberg

So much for the vaunted comeback in the second half. The two major computer chip companies are now recognizing that demand for PCs is declining further than their already bleak outlook.

On Monday, Bernstein analyst Stacy Rasgon released a report after meeting senior executives at




) and

Advanced micro-devices



) last week. The main takeaway is that the PC market is “deteriorating”.

AMD and Intel use the x86 chip architecture in creating the processors that act as the main computer brain for PCs and servers.

For Intel, the company’s chief financial officer, David Zinsner, told Rasgon that the PC market has “deteriorated further” than the “10% drop [versus 2021]annual PC market guidelines the company issued in July. The executive offered no revised outlook. Zinsner said the data center market has weakened due to weaker sales in China and the more difficult macro environment.

The analyst also met with AMD’s Dan McNamara, the head of the chipmaker’s business server unit. The AMD executive revealed that the current PC environment is “messy” and customer prospects are weaker than expected. AMD said the PC market is moving worse than the company’s previous PC market outlook, with a “mid” percent drop from the previous year.

Rasgon has an Underperform rating on Intel stocks with a $30 price target. He rates AMD stocks on Outperform with a $135 price target.

In trading on Monday, Intel shares fell 0.8% to $29.00, while AMD shares fell 0.3% to $76.28.

In April, Intel forecast a rebound for the PC market for the second half of this year. But business conditions only got worse in the months that followed. Worldwide shipping for personal computers fell 15% in the June quarter from a year earlier, according to IDC. Subsequently, Intel and AMD lowered their full-year 2022 PC market forecasts when they reported their second-quarter earnings.

But now both companies say the overall PC market is doing even worse than their lowered expectations. That doesn’t bode well for their results in the future.

Write to Tae Kim on [email protected]

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