Intel’s stock inches up on solid earnings and revenue beat – News

Shares of the troubled chipmaker Intel Corp. rose more than 3% after-hours on the back of solid fourth-quarter results that topped expectations, overshadowing somewhat disappointing guidance.

The company reported earnings before certain costs such as stock compensation of 13 cents per share, squeezing past Wall Street’s consensus estimate of 12 cents per share. Revenue for the quarter came to $14.26 billion, up 7% from a year ago and ahead of the Street’s target of $13.81 billion.

All told, the company delivered a net loss of $126 million in the quarter, down from a profit of $2.67 billion in the same period one year ago.

Today’s report is the first since the chipmaker’s board of directors ousted former Chief Executive Officer Pat Gelsinger, who had struggled for years to revive the company’s fortunes. He presided over an incredibly rough period, during which Intel not only missed the artificial intelligence boat, but also lost share in key markets such as personal computer and server chips, though much of that failure predated his tenure. At the same time, the company has spent billions of dollars in building new chip manufacturing plants, with little revenue momentum to show for those investments.

Following Gelsinger’s somewhat surprising departure, Intel appointed its finance chief David Zinsner and products manager Michelle Holthaus as interim co-CEOs.

Holthaus said the fourth quarter was a “positive step forward” for the company, as it delivered revenue, gross margin and earnings all above guidance.

“Our renewed focus on strengthening and simplifying our product portfolio, combined with continued progress on our process roadmap, is positioning us to better serve the needs of our customers,” she said. “Dave and I are taking actions to enhance our competitive position and create shareholder value.”

In the meantime, the company is continuing its search for a permanent CEO to succeed Gelsinger, but Zinsner said on a call with analysts there’s nothing to report so far.

During the call, Holthaus responded to a number of questions from analysts regarding its product roadmap. Somewhat disappointingly, she said the company’s Falcon Shores AI processor will only be used in servers as a test chip. Based on industry feedback, the company has no plans to launch the product for sale, she said.

In 2023, Intel had pitched Falcon Shores as a potential alternative to Nvidia Corp.’s graphics processing units, which power the vast majority of AI workloads today. The chip was announced shortly after Intel stopped development of its Rialto Bridge GPUs for servers.

Going forward, Intel will be pinning its AI hopes on a new product called Jaguar Shores, which is designed for a broad range of AI data center workloads, Holthaus said.

Meanwhile, the company expects to achieve volume chip production for its most advanced 18A process technology by the second half of the calendar year, when it will launch its first central processing units based on that tech, code-named Panther Lake.

With respect to guidance, Intel said it’s expecting a breakeven profit in the first quarter, with revenue coming between $11.7 billion and $12.7 billion. Analysts had forecast a profit of nine cents per share on sales of $12.87 billion.

Zinsner told analysts the guidance reflects “seasonal weakness” that’s magnified by “macro uncertainties” such as inventory digestion and competitive dynamics. He added that the prospect of tariffs also adds to the uncertainty.

Breaking down the latest results, Intel’s Client Computing group, which sells PC chips, generated $8.02 billion in sales, down 9% from a year ago but ahead of the Street’s estimate of $7.84 billion.

“While difficult to quantify, we suspect a portion of Q4 revenue upside was due to customers hedging against potential tariffs,” Zinsner said.

As for the Data Center and AI segment, which makes chips for cloud-based servers, revenue came to $3.39 billion, down 3% from a year ago and in-line with the Street’s estimate. The Network and Edge unit added another $1.62 billion in sales, up 10% from a year ago and above the $1.5 billion consensus estimate.

Mobileye Global Inc., the Intel-owned but publicly traded manufacturer of chips for advanced driver assistance systems and autonomous vehicle technologies reported earnings separately this morning. It beat expectations, posting a profit of 13 cents per share versus the consensus estimate of 11 cents, with revenue topping $490 million, ahead of the $477.8 million analyst target.

Mobileye’s stock rose almost 2% today after its early-morning report but was down slightly in the extended trading session after it could only offer weak guidance for the upcoming year. It’s calling for fiscal 2025 revenue of between $1.69 billion and $1.81 billion, some way off the Street’s estimate of $1.94 billion.

Constellation Research Inc. analyst Holger Mueller told News that investors appear to be pleasantly surprised by Intel’s results. “It has made some surprising progress, delivering to expectations for the first time in a while, and that’s what investors need to see,” the analyst said.

Mueller added that he thinks the interim co-CEOs Zinsner and Holthaus appear to be working well together too, as they are showing they already gotten a good grip on the company’s finances. They manged to reduce the company’s sales and marketing budget to bring it closely to break even, without sacrificing essential spending on research and development, which he believes is sorely needed to drive innovation.

“The challenge for Intel is that it needs to deliver on its R&D investments, as its overall cost structure still remains untenable in the longer term,” Mueller added. “Investors will be watching very closely for more progress in the first quarter.”

Amid the ongoing hunt for a new Intel CEO, there has been a lot of speculation about what might happen to the various parts of Intel’s business, with many analysts expecting the company to shed its burdensome foundry business, which continues to rack up losses. Last month, Intel said it’s also planning to spin off its venture capital arm, Intel Capital, as a separate business.

Intel is also trying to sell at least a minority stake in its Altera unit, which manufactures field-programmable gate arrays that can be reprogrammed to suit different computing tasks. The company shelled out $14.5 billion to acquire Altera in 2015.

In an update, Zinsner said the company is “far along on the process of Altera.” He added that he expects to have more to say by the time Intel delivers its next financial results in three months. “That will help generate some cash that we can use to deliver,” he promised.

In the wake of Gelsinger’s dismissal, there was speculation that Intel may even be acquired outright by one of its larger competitors in the chip business, with names like Qualcomm Inc. and Broadcom Inc. mentioned as possible buyers. However, Broadcom CEO Hock Tan said last month he has “no interest” in buying the company, and it’s also believed that Qualcomm’s interest has cooled.

Photo: Intel