Intel stock crashes 22% as Q2 misses estimates on margin issues ...

Investing.com -- Intel stock fell significantly after the chipmaker on Thursday suspended its dividend and said it expected a loss in the third quarter after reporting Q2 results that fell short of estimates amid margin pressures.

Intel Corporation (NASDAQ:) crashed 22% in Friday's premarket trading. 

The company said it was suspending its dividend starting in Q4. 

Intel Q2 adjusted earnings of $0.02 on revenue of $12.83B, missing Wall Street estimates of $0.10 and $12.93B, respectively. 

The miss on the top and bottom lines comes as margins were hurt by the "accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity," the company said.

Gross margin fell 0.4% to 35.4%.

Looking ahead to Q3, the company guided for an adjusted loss of $0.03 on revenue in a range of $12.5B to $13.5B, confounding analyst estimates for adjusted EPS of $0.31 on revenue of $14.39B.

Intel forecast margin in Q3 falling to 34.5% even as it detailed cost-cutting plans including a more than 15% headcount reduction, to resize and refocus.

"Falling share, margin issues, and capex/opex cuts smell more like a spiral as time running out on a solution," Jefferies analysts commented in a post-earnings note.

"This is yet another major reset of the story with Client and Servers both well below seasonal and gross margins significantly lower," they added, maintaining a Hold rating on the stock and trimming the price target from $34 to $28. 

Separately, analysts at Raymond James downgraded Intel stock to Market Perform after the report.

"We expected the 3Q outlook to be weak but are surprised by the magnitude, especially on margins," they said. 

"While management sounded confident about longer-term targets, GM headwinds are expected to persist through 2025, and we see limited incremental revenue drivers near-term," Raymond James added in its note.

"As such, we expect profitability to remain under pressure and are moving to the sidelines despite the attractive valuation and our view that an eventual Foundry separation could unlock significant value."

Yasin Ebrahim contributed to this report.