Intel (INTC  ) shares plunged nearly 7% following the company's Q1 earnings report. The chipmaker managed to exceed analysts' estimates on the top and bottom line but issued guidance that was well below analysts' expectations, leading to the selloff.

Even after this move lower, Intel is an outperformer relative to its peers and the broad market with a 12% YTD decline while the semiconductor index and Nasdaq are down more. However, this is not the case on a longer-term basis as Intel's stock is basically flat since October 2017 (although this doesn't include dividends). In contrast, the Nasdaq and semiconductor ETF are up 110% and 154%, respectively.

Inside the Numbers

In Q1, Intel reported $0.87 per share, topping expectations of $0.81. Revenue came in higher than expected at $18.4 billion vs. $18.3 billion and a 7% decline from last year. The company's gross margin also contracted to 50.4% from 55.2% due to investments in new production capacity.

Client Computing had $9.3 billion in revenue, a 13% decline and below expectations as PC shipments declined during the quarter with weakness in consumer and education segments. Another factor for the miss was Apple shifting away from Intel chips and using its own M1 line.

The company also debuted a new segment - Datacenter and AI - which saw a 22% increase in revenue to $6 billion as data center and enterprise demand remind strong.

For Q2, the company sees adjusted earnings per share of $0.70 and $18 billion in revenue. This fell short of expectations of $18.3 billion in sales and $0.83 per share in adjusted earnings. For the full year, Intel sees $3.60 in earnings per share and $76 billion in revenue. This was in line with estimates.

It sees inventory issues improving in the second half of the year although this recovery could be impacted by the lockdowns in CHina. It said another threat was that inflation could erode demand for items like PCs.

Overall, Intel remains intriguing especially if it can pull off its pivot and shrink the gap between itself and its competitors. It has a forward P/E of 12 and pays a 3.2% dividend which means the downside is limited as long as earnings turn higher in the coming quarters. But, there is a risk of it becoming a value trap if it can't pull off this pivot.