Intel Corporation's stock experienced a significant drop of 20% in after-hours trading on Thursday, after the company reported its Q2 financial results, which showed a 1% decrease in revenue year-over-year and a net loss of $1.61 billion for the quarter ended June 29th. This is a stark contrast to the net profit of $1.48 billion from the same period last year. The company's CEO, Pat Gelsinger, indicated that investments in the development of the Core Ultra PC chip, capable of handling artificial intelligence workloads, contributed to the losses.

Gelsinger expressed during a call with analysts that despite the short-term pressure on profit margins due to investments in AI PC technology, he believes the trade-offs are worthwhile, predicting that the market share of AI PCs will grow from less than 10% currently to over 50% by 2026.

The Client Computing Group, responsible for producing PC chips, reported revenue of $7.41 billion, a 9% increase year-over-year, nearly meeting the analyst consensus of $7.42 billion as surveyed by StreetAccount. Intel's data showed performance related to AI-friendly PC chips exceeded internal expectations, with shipments expected to surpass 40 million units in 2024.

The Data Center and Artificial Intelligence Group reported revenue of $3.05 billion, a 3% decrease from the previous year, which was below the analyst average expectation of $3.14 billion as surveyed by StreetAccount.

For the third quarter, Intel forecasts an adjusted net loss per share of 3 cents with revenue between $12.5 billion and $13.5 billion. This is significantly lower than the analyst consensus from the London Stock Exchange Group survey, which predicted adjusted net profits of 31 cents per share and revenue of $14.35 billion.

Gelsinger outlined in a memo that the layoffs, which will primarily occur this year, will affect about 15,000 employees, marking one of the largest single job cuts listed on the Layoffs.fyi website. He stated, "In short, we must align our cost structure with a new operational model and fundamentally change how we operate. Our revenue has not grown as expected, and we have not fully benefited from powerful trends such as artificial intelligence. Our costs are too high, and our margins are too low."

Excluding the drop after Thursday's trading, Intel's stock has fallen 42% year-to-date, whereas the S&P 500 Index has risen by nearly 14% over the same period.