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What You Need To Know Ahead of Intel’s Earnings Report Thursday

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Key Takeaways

  • Intel is set to report earnings for the first quarter of 2024 on Thursday after the closing bell.
  • Analysts expect Intel’s revenue and income to grow year-over-year, but to fall from the prior quarter due to a seasonal decline.
  • The company will report data-center and artificial intelligence revenue, which could provide insight into customer demand.
  • Intel could also provide updates on its foundry business while in the process of transitioning the semiconductor manufacturing segment into a more independent unit.

Intel (INTC) is set to report first-quarter earnings after the bell Thursday, with investors watching for data center and artificial intelligence (AI) revenue growth at the technology company, along with any updates on its foundry business.

Analysts project Intel’s revenue to be $12.95 billion for the first quarter of 2024, down from the previous quarter, but higher than the same period in 2023, according to estimates compiled by Visible Alpha. Historically, Intel has experienced a seasonal decline in the first quarter.

Adjusted net income is expected to be $593.5 million, a significant drop from the final quarter of 2023, but a reversal from the same period the year before, when the company recorded a net loss of $167 million. Analysts expect adjusted diluted earnings per share (EPS) to come in at 14 cents, swinging from a 4-cent loss in the same period a year earlier.

Analyst Estimates for Q1 2024 Q4 2023 Q1 2023
Revenue $12.95 billion $15.41 billion $11.72 billion
Adjusted Diluted Earnings / (Loss) Per Share 14 cents 54 cents (4 cents)
Adjusted Net Income / (Loss) $593.5 million $2.3 billion ($167 million)

Key Metric: Data Center and AI Revenue

Intel also will report its data-center and AI revenue for the first quarter, which could provide insight into customer demand for these products.

UBS (UBS) analysts wrote that “demand signals for traditional servers have turned favorable following a prolonged period of muted/declining spend” with Dell Technologies (DELL), Advanced Micro Devices (AMD), and Micron Technology (MU) reporting a rebound in demand.

The analysts said that they expect Intel’s data-center and AI units to rise 6% from the quarter prior, but remain flat year-over-year. UBS suggested “some of the demand tailwind is attributable to hyperscale customers tapering growth on AI server spend and diverting capital to traditional compute over the next couple of quarters” before Nvidia’s (NVDA) Blackwell platform expected to ship later in 2024.

Intel has struggled to keep up with peers like Nvidia and AMD amid the AI boom. The company recently unveiled its latest AI chip, the Gaudi 3 AI accelerator, which Intel claims outperforms Nvidia’s H100.

CFRA analyst Angelo Zino told Investopedia that his firm doesn’t view “Intel being a threat for Nvidia” in the near future, but noted that “it’s another option out there” for customers. The “long-term story for Intel continues to be on the foundry side of things” because the company is not producing “leading-edge AI chips” and has “clearly fallen behind,” and is now playing a difficult game of catch-up with its competitors, Zino added.

Business Spotlight: Foundry Business

Intel recently announced a new reporting structure under which it will report financials for its foundry or semiconductor manufacturing business separately from its other segments as part of the company’s efforts to operate its foundry business as a more independent unit.

The new structure disclosed widening losses in its foundry business. The company also will provide foundry revenue in its first-quarter report, which could allow investors to gauge key metrics for the semiconductor manufacturing business.

Bank of America (BAC) analysts said that Intel’s foundry business’ ability to be profitable in a competitive environment plays a role, among other factors, in the bull and bear cases for the stock.

UBS analysts wrote that Intel’s foundry losses are “not entirely unexpected,” but confirmed that the chipmaker‘s costs are higher than competitors.

They said that UBS “remain[s] optimistic that profitability will improve as the company transitions away from structural cost challenges,” but noted that they are “cognizant that most of the profitability improvement only materializes in the 2027+ timeframe.”

Intel shares have lost almost 32% so far this year, with shares closing at $34.20 on Friday.

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