Why did the shares of Intel fall today? Multiple downgrades are a result of poor results and guidance.

Friday saw a nearly 9% decline in the value of Intel (NASDAQ:INTC) shares after the chip giant reported second-quarter results that several Wall Street analysts had downgraded because they were "below the standards we have set for the company and our shareholders," according to Chief Executive Pat Gelsinger.

Tristan Gerra, a Baird analyst, downgraded Intel (INTC) shares from outperform to neutral and lowered the price target from $60 to $40, stating that the business has been negatively impacted by the deteriorating demand from consumers for PCs, which was not anticipated to improve any time soon.

Gerra predicted that there would be no PC recovery in the "near term," citing "poor first-half seasonality" and a change in customer behaviour. Gerra also noted that Advanced Micro Devices (AMD) should profit from delays in Sapphire Rapids and the rest of Intel's (INTC) product mix in the server market in the second half of the year.

For the two weeks that ended on July 2, Intel (INTC) reported earnings of adjusted $0.29 per share on $15.3 billion in revenue, a decrease of 17% year over year. Data Center revenue decreased by 16 percent year over year, while Client Computing, the company's largest business unit, saw sales of $7.7 billion, which were down by 25 percent year over year.

Intel (INTC) forecast third-quarter revenues between $15 and $16 billion, significantly less than the $18.67 billion analysts had predicted. Earnings per share are anticipated to be $0.35 with non-GAAP gross margins of 46.5 percent.

The Santa Clara, California-based Intel (INTC) also lowered its full-year sales forecast from an earlier forecast of $76 billion to between $65 billion and $68 billion. Analysts predicted total year revenue of $74.76 billion.

Christopher Rolland, a Susquehanna analyst, downgraded Intel (INTC) from neutral to negative and noted that the company is facing a number of "long-term headwinds," such as servers switching to Arm, Arm gaining market share in PCs, and Apple (AAPL) expanding their M-series to "completely replace" Intel.

Additionally, Advanced Micro Devices (AMD) is probably going to continue expanding its market share in the PC sector, albeit more slowly than in recent years. And AMD's (AMD) server market share is set to increase with the introduction of 5nm Genoa, which is anticipated to ship before the aforementioned Sapphire Roads and may not do so until next year.

As the company spends to move to more complex geometries and competition increases, Intel's (INTC) product roadmap continues to be pushed back, potentially delaying Granite Rapids and Meteor Lake. Additionally, gross margin pressure is present. Other risks to Intel (INTC) include a "[work from home] hangover," which could cause the PC market to be smaller than anticipated, as well as a "growing mismatch" between earnings and free cash flow per share.

By promoting Moore's Law and process leadership, Rolland claimed in a note to clients, "Intel was able to cover up a litany of failed initiatives, bad acquisitions, and strategic errors for decades." We predict that Intel will continue to experience challenges with growth, profitability, and cash flow unless they restore this leadership (which we believe is improbable).

A 10% fall in the PC market and persistent economic hardship were the two reasons given by Intel's (INTC) Gelsinger during the earnings call for the company's decision to reduce spending and expenses for the rest of the year.