Intel (NASDAQ: $INTC) Falls After Missing First-Quarter Outlook Estimates

Intel (NASDAQ: $INTC) is a leading American multinational corporation and the world’s largest producer of CPUs and semiconductors by revenue. It is the pioneer developer of the x86 series CPUs found in most PCs. Over the years, Intel has been pivotal in shaping the technology industry’s development and computer hardware advancement.

INTC Stock Sinks on Disappointing Q4 Report

Intel stock sank more than 10% this early trading on Friday. The sharp decline came after the company released its fourth quarter and FY23 financial results. It exceeded analysts’ expectations, but its forecast for the current quarter fell short of estimates.

Intel said on Thursday, January 25, that it anticipates adjusted earnings per share of $0.13. That was well below analysts’ estimate of $0.34. In the fourth quarter report, the company reported an adjusted earnings per share of $0.54, outperforming analyst expectations of $0.44. It also reported a 10% Y/Y increase in revenue to $15.3 billion, surpassing analyst expectations of $15.2 billion.

Intel CFO David Zinsner said the company “comfortably achieved” its objective of achieving cost savings exceeding $3 billion in 2023.

Intel’s AI and Data Center Units Slump

The company’s two business units, AI and Data Center, also failed to meet expectations, reporting fourth-quarter revenues of $4 billion, below Street estimates of $4.1 billion. This represented a 10% decline compared to the same quarter last year.

The AI business and Data Center have helped Intel compete with its rivals Nvidia (NVD) and Advance Micro Devices (AMD). Furthermore, Intel CEO Pat Gelsinger unveiled the company’s upcoming Gaudi3 accelerator. The accelerator is designed to support generative AI software and services.

Intel to Focus on AI Innovation

Intel announced the inauguration of its new chip manufacturing foundry in Mexico on Wednesday, July 24. The company’s current aim is to regain its position as a semiconductor industry leader; it is working on a multi-year turnaround. Intel faced headwinds in 2023, including losing manufacturing leadership and market share to competitors like TSMC and AMD.

Gelsinger said in the press release, “The company this year remains “relentlessly focused on achieving process and product leadership, continuing to build our external foundry business and at-scale global manufacturing, and executing our mission to bring AI everywhere as we drive long-term value for stakeholders.”

The company’s stock had gained 45% over the last six months before this Friday’s decline.

Intel Ultra Line of Chips

The company expects its Ultra Line of Chips to continue to boost PC sales in the year ahead, as consumers and enterprises that purchased new laptops and desktops during the 2020 pandemic started looking for replacement devices.

The Core Ultra features a neural processing unit (NPU), enabling PCs to execute specific AI applications locally, eliminating the need for users to depend on cloud-based applications. NPUs enable users to access AI applications offline, ensuring that their data remains on their devices instead of going to the servers of an AI company.

Stock Update: $INTC

$INTC is currently trading at $43.68, a decline of 1.86% from a previous close of $49.55 as of 03:25 PM EST. The market cap is $184.70 Billion with a volume of 106,497,448.

Is INTC Stock a Buy?

Intel hit most of the analysts’ estimates for the fourth quarter. However, the stock was down over 11% in late afternoon trading on Friday, January 26, 2024, due to a lower-than-expected forecast. The company is focusing on developing chips for AI-based software and applications. That could help turn things around for the stock in the long term.

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