Chip giant Intel's (INTC 0.63%) terrible year may be about to get worse when the company releases its second-quarter 2022 results after the market closes on Thursday, July 28.

Intel stock is already down 25% this year thanks to the market sell-off. Additionally, the near-term forecast issued by Intel at its investor meeting held in February this year wasn't received well by Wall Street. Intel's 2022 guidance pointed toward a steep decline in the company's margins and earnings. The chipmaker expects an adjusted gross margin of 52% this year as compared to 57.7% last year. Non-GAAP earnings are expected to drop to $3.50 per share from $5.47 per share in 2021.

Of course, Intel aims to regain its mojo in the long run, but it looks like things will get worse before they start getting better. That's because Intel's biggest business -- the client computing group (CCG) -- is in for a tough time in the second quarter and for the rest of the year. Here's why.

Meet Intel's biggest headwind

Sales of personal computers (PC) have been dwindling in 2022. According to market research firm IDC, PC sales were down 5.1% year over year in the first quarter of the year. However, the decline accelerated in Q2 with PC sales crashing 15.3% over the prior-year period as demand cooled off and supply remained disrupted on account of COVID-19-related lockdowns in China.

This doesn't bode for Intel which gets half of its revenue from the CCG business, which includes sales of central processing units (CPUs) that are used in desktops and notebooks. The CCG business generated $9.3 billion in revenue for Intel in Q1. The segment's revenue was down 13% from the prior-year period thanks to lower sales of both desktop and notebook processors, which was triggered by Apple's move of building its chips in-house instead of using Intel's offerings.

Interestingly, Intel had enjoyed a 25% year-over-year increase in average selling prices (ASP) of its CPUs in Q1 thanks to a rich product mix. However, the steeper drop in PC sales in the second quarter indicates that Intel's shipments may have taken a bigger hit as compared to Q1. Additionally, Apple is expected to have completed the transition to its own chips from Intel's processors in June 2022, which is another factor that will weigh on the latter's top line.

Meanwhile, Intel lost 2.3 percentage points of market share to Advanced Micro Devices (AMD 3.44%) in the second quarter as compared to the first one, as per third-party estimates. Chipzilla was reportedly way behind AMD in markets such as Germany, where the latter held a 63% share of shipments. It is also worth noting that AMD claims to have stronger exposure to the higher end of the PC market.

If Intel was left with the low-hanging fruit last quarter, its CPU ASP could take a hit. Throw in the potential drop in Intel's volumes and it is easy to see why the company's largest business could be in for difficult times in the second quarter. Even worse, PC shipments are expected to contract 8.2% as per IDC. However, the Q2 decline indicates that there may be a bigger drop in the cards.

So, Intel's CCG business seems to be on shaky ground as the developments in the PC market suggest.

Should investors press the panic button?

It won't be surprising to see Intel stock head lower in the near term given the conditions in the PC market. Lower revenue, weaker margins, and shrinking earnings for 2022 have already dented investor confidence in Intel, and a bad set of results could hurt the stock further.

Analysts have already dialed down their expectations as they are expecting $17.96 billion in revenue from Intel in the second quarter. That's lower than the company's guidance of $18 billion. The chipmaker expects adjusted earnings of $0.70 per share in Q2 as compared to $1.28 per share in the prior-year period. But if AMD has indeed cornered the higher end of the CPU market, Intel's earnings may not match expectations.

It is worth noting that Intel is pulling strings to ensure a turnaround in its fortunes in the long run by way of higher capital expenses to upgrade its technology, an aggressive product roadmap to take share away from rivals, and an expansion into new niches. But those steps would take time to bear fruit. The near-term headwinds could send this semiconductor stock lower, which means that there could be better opportunities to buy Intel before its turnaround takes shape.