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Shares of the company fell 5% in after-market trading.
Rising inflation, resurgence of COVID-19 in China and uncertainties around the war in Ukraine have shifted consumer spending away from gadgets, hurting Intel, which saw more than half of its revenue last year coming from the segment selling processors for PCs.
Analysts say the PC market is coming off of searing rates of growth over the last two years as remote working and learning triggered high demand during the pandemic.
As lockdowns in China continue, supply-chain bottlenecks are likely to hurt Intel’s customers, in turn affecting the chipmaker’s business.
The company expects current-quarter adjusted profit of 70 cents per share on revenue of about $18 billion, below analysts’ average estimate of 83 cents per share on $18.38 billion, according to IBES data from Refinitiv.
Intel is also facing increasing competition in the data center space, as peers Nvidia (NASDAQ:NVDA) Corp and Advanced Micro Devices (NASDAQ:AMD) are ramping up their chip production to cater to the booming market amid growth in the metaverse, AI applications and cloud computing.
Revenue from Intel’s higher-margin data center and AI business rose 22% to $6 billion in the reported quarter, while analysts on average had expected $6.77 billion.
However, adjusted revenue for the first quarter was $18.4 billion, compared with analysts’ average estimate of $18.31 billion.
On an adjusted basis, Intel earned 87 cents per share, above expectations of 81 cents.
