The worst drop in fifty years, what can Intel rely on to turn things around?

This week, the former chip giant Intel has become the focus of Wall Street's attention - but not in the way it would like.

After the Q2 financial report, the company's stock price plummeted by 26% to $21.48 in a single day, marking the company's largest drop in nearly 50 years, second only to a 31% decline in July 1974. The stock price has fallen by 42% this year, with intense selling leading to a 2.4% drop in the Nasdaq index and dragging down global semiconductor stocks.

Currently, the company's market value has fallen below $100 billion to $96.7 billion.

Financial reports hit hard, executives admit misjudgment

This week, bad news kept coming for Intel: including a massive layoff of 15,000 employees, the first dividend suspension in 32 years, and disappointing financial performance announced on Thursday.

The most surprising aspect was its financial guidance. Intel stated that it expects revenue for this quarter to be $12.83 billion, well below the widely expected $14.4 billion. Revenue is down 8% from the same period last year.

Intel's outlook for the third quarter is even worse, with expected revenue of $12.5-13.5 billion, a decrease of $1.2 billion from the same period last year. Profit margin is also weak, expected to be 38%, down nearly 8 percentage points year-on-year.

Analysts believe that Intel's main problem lies in the company's failure to keep up with product development. In particular, the data center business, with revenue of $3.05 billion, down 3% year-on-year, compared to analysts' expectations of $3.07 billion.

As the saying goes, "If you don't advance, you retreat." In contrast, Intel's strongest competitor AMD has taken most of the market share, with revenue in the data center division more than doubling. New Street Research estimates that by the end of the year, AMD's market share in the x86 server processor business will reach 40%, compared to less than 5% four years ago.

Intel CEO Pat Gelsinger admitted during a conference call with analysts that the decision to produce Core Ultra PC chips capable of handling artificial intelligence workloads faster has led to the company's losses.

Other company executives admitted that they misjudged the company's sales and pace of technological improvements.

"We were too optimistic about revenue," said CFO David Zinsner, "We should have a deeper understanding of the direction of the business over the year."

How to turn the tables?

Facing an increasingly fierce market share battle, does Intel still have a chance to turn the tables?

Some analysts believe that it needs two products to succeed in the next 12 months: Lunar/Panther Lake and Gaudi 3.

Lunar Lake and Panther Lake are key products for client business, accelerating AI performance and significantly improving graphics performance for consumer and commercial laptops. Panther Lake, planned to be released in the second half of 2025, is said by company executives to be a "processor better than AMD products in terms of performance and energy efficiency."

Analysts suggest that Intel needs these products not only to maintain its customer base but also to motivate and attract them to purchase new products at higher prices, in order to improve profit margins and better compete against AMD and Qualcomm.

Meanwhile, Gaudi 3 is the third-generation product of Intel's Habana AI accelerator series, representing Intel's last hope in the revolution of the data center AI ecosystem.

Market Watch columnist Ryan Shrout believes that Intel's Gaudi product line has the technical strength and potential to make waves. It has price advantages and various architectural features that set it apart from standard GPU accelerators.

However, if Intel's leadership fails to develop a cohesive sales and marketing strategy for the latest two products, Intel may not have much time left