Intel stock hit the skids after announcing it will slash nearly 17,000 workers and pause its dividend as part of a sweeping cost-cutting plan.
The chipmaker plans to "resize and refocus" its 116,500 workforce in an effort to save $10 billion to combat challenging trends.
Intel shares fell nearly 20% in extended trading Thursday.
"Clearly market conditions, some were good and some not so good, and you have to adjust the financial envelope appropriately," Gelsinger said in an interview with the Wall Street Journal. "The AI surge was much more acute than I expected, and you have to adjust to those things."
Demand for AI chips from the likes of Nvidia has shifted away from non-AI products, cutting Intel’s sales by 1% to $12.8 billion. The company lost $1.6 billion compared to a profit of $1.5 billion in the prior quarter.
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The chipmaker's job cuts come ahead of the widely anticipated July employment report due on Friday. Economists will be watching whether Intel's cuts are more company specific or related to an industry slowdown.
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Intel will suspend its $0.125 per share quarterly dividend in the fourth-quarter but will deliver the payout on September 1 for shareholders of record as of August 7, 2024.
Shares have slumped over 40% this year while the Nasdaq Composite has advanced over 14%.
