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This week, one-time chip giant Intel became the focus of Wall Street's attention - but not in the way it wanted.

After the Q2 earnings report, the company's stock price plummeted 26% to $21.48 in one day, which is almost the worst drop in the company's 50 years, second only to the 31% drop in July 1974. The company's stock price has fallen 42% this year, and the fierce sell-off has caused the Nasdaq index to fall 2.4% and dragged down global semiconductor stocks.

The company's market value has now fallen below $100 billion to $96.7 billion.

Financial reports were criticized everywhere, and executives admitted misjudgment

This week, Intel has been hit with a barrage of bad news: a massive layoff of 15,000 employees, a dividend suspension for the first time in 32 years, and disappointing earnings results released on Thursday.

The most surprising thing was its performance guidance. Intel said it expects revenue of $12.83 billion this quarter, far below the general expectation of $14.4 billion. Revenue is down 8% from the same period last year.

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

Analysts believe that Intel's main problem is that the company has not kept up with the pace in product research and development. In particular, the data center business had revenue of $3.05 billion, a year-on-year decrease of 3%, while analysts expected $3.07 billion.

In contrast, Intel's strongest competitor AMD has captured most of the market share, with revenue from its 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 Chief Executive Pat Gelsinger said on a call with analysts that a decision to more quickly produce its Core Ultra PC chips capable of handling artificial intelligence workloads had cost the company.

Other company executives acknowledged that they misjudged the pace of the company's sales and technology improvements.

“We were overly optimistic on revenue,” Chief Financial Officer David Zinsner said. “We should have had better visibility into where the business was headed during the year.”

How to turn the tables?

Faced with the increasingly fierce battle for market share, does Intel still have a chance to turn things around?

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 the client business that will accelerate AI performance and significantly improve graphics performance for consumer and commercial laptops. Panther Lake is scheduled to be released in the second half of 2025, and company executives said it will be "a better processor than AMD products in terms of performance and energy efficiency."

Analysts say Intel needs these products not only to maintain its customer base, but also to incentivize and entice them to buy new products at higher prices to improve profit margins and better cope with competition from Advanced Micro Devices and Qualcomm.

Meanwhile, Gaudi 3 is the third generation of Intel’s Habana AI accelerator family, Intel’s last hope for making headway in the data center AI ecosystem revolution.

Market Watch columnist Ryan Shrout believes that Intel's Gaudi product line has the technical strength and potential to make waves. It has a price advantage and a variety of architectural features that make it stand out from standard GPU accelerators.

But if Intel's leadership can't come up with a cohesive sales and marketing strategy for its two latest products, time may be running out for Intel.