Intel earnings: Bad.

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The numbers: Bad. Second-quarter revenues fell 5.1% versus the second quarter of 2012. Profits tumbled 29.3%. Gross margins fell five percentage points from the prior year, to 58%. Shares fell after hours.

The takeaway: The chipmaker has a commanding position in the world of PCs. But the PC market is tanking. Operating income at Intel’s PC Client Group, its biggest, shrank 23% during the second quarter. There’s no secret about what’s going on here. It’s the tablets, stupid.

What’s interesting: Everbody knew that PCs were hurting. But that didn’t stop Intel shares from running ahead with the rest of the US stock market. The shares were up 17% so far this year, or they were before Intel’s earnings were posted after the closing bell. (The S&P 500 was up about 18% over the same period.) Intel’s increase, in the face of such lackluster fundamentals, can’t help but reinforce the view that this year’s stock rally has perhaps been a bit frothy.