Intel earnings preview: can AI momentum drive semiconductor growth?
Intel's upcoming quarterly results will spotlight AI chip development progress and data centre demand amid intense competition in the semiconductor sector.
Intel Q4 earnings expectations
Intel Corporation is set to announce its fourth quarter (Q4) and full-year 2024 financial results on Thursday, January 30, 2025, after market close. An earnings conference call is scheduled for 2:00 PM PST to discuss the outcomes.
Shares in Intel face scrutiny as investors assess the company's progress in artificial intelligence (AI) chip development and manufacturing.
Market consensus focuses on data centre revenue growth and AI acceleration products uptake.
Client computing group performance will indicate PC market health and market share dynamics.
Manufacturing progress and capacity expansion updates remain crucial for investor confidence.
Analyst projections
For Q4 2024, analysts anticipate Intel to report:
Revenue of approximately $13.81 billion, indicating an 10% decrease from the same quarter in the previous year.
Earnings Per Share (EPS): Expected at $0.12, down from $0.54 in Q4 2023.
Forward guidance expectations
Market focus will be on 2025 revenue and margin projections.
Capital expenditure plans could influence investor sentiment.
AI product roadmap updates will be crucial for growth expectations.
Industry demand outlook will guide inventory management strategies.
Key business segments
The Client Computing Group (CCG) has projected revenues of $8.32 billion, a 25.7% year-over-year (YoY) increase, driven by a recovery in PC demand and new product introductions.
Data Centre and AI (DCAI) have expected revenues of $4.10 billion, a 4.6% decrease from the prior year, reflecting competitive pressures in the data centre market.
Network and Edge (NEX) anticipate revenues of $1.55 billion, marking a 25% decline YoY, influenced by market dynamics and strategic shifts.
Strategic Initiatives
Intel's focus on AI and foundry services is pivotal. The introduction of the Gaudi3 AI accelerator aims to strengthen Intel's position in the AI market. Additionally, the expansion of Intel Foundry Services is expected to contribute to long-term growth.
Market performance
Over the past year, Intel's stock has fallen by around 55%, greatly underperforming the Nasdaq 100's and S&P 500's approximately 25% gains.
Intel versus Nasdaq 100 and S&P 500 1-year comparison chart
Several key factors contributed to this downturn:
1. Competitive pressures and market position
Intel faced intensified competition from companies like Advanced Micro Devices (AMD) and NVIDIA, particularly in the AI and graphics processing unit (GPU) markets. The company's struggles to penetrate the AI chip market raised concerns about its ability to maintain market share.
2. Leadership instability
The abrupt retirement of CEO Pat Gelsinger in December 2024, reportedly at the board's behest due to dissatisfaction with the pace of Intel's turnaround efforts, added to investor uncertainty. Gelsinger's departure underscored challenges in executing strategic initiatives aimed at revitalising the company.
3. Financial performance and strategic missteps
Intel reported a $1.6 billion loss in the second quarter (Q2) of 2024, leading to significant cost-cutting measures, including plans to reduce the workforce by approximately 15,000 roles (15% of its workforce) to achieve $10 billion in cost savings by 2025. Additionally, the company's foundry business reported substantial losses, with projections indicating it would not break even before 2027.
Intel analyst and TipRanks Smart Score ratings
According to LSEG Data & Analytics, analysts rate the Intel share as a ‘hold’ with 1 ‘strong buy’, 2 ‘buy’, 37 ‘hold’, 5 ‘sell’ and 1 ‘strong sell’ (as of 23/01/2025).
Intel also has a TipRanks Smart Score of ‘5 Neutral’ and is rated as a ‘hold’ by analysts with 1 ’buy’, 22 ‘hold’ and 4 sell recommendations (as of 23/01/2025).
Intel technical analysis
The Intel share price is seen bouncing off its mid-January $18.73 low, made close to the $18.51 September low. It is testing its 2024-to-2025 downtrend line at $22.45 which currently caps.
Intel weekly candlestick chart
More than a break through the downtrend line is needed for the Intel share price to reverse its fortunes, though, as the October and December 2022 as well as the February 2023 lows offer a formidable resistance area at $24.59-to-$25.35.
For a medium-term bullish reversal to gain traction, a rise and weekly chart close above the May 2023 low and the November 2024 high at $26.43-to-$26.86 would need to occur.
Failure at the September 2024 and January lows at $18.73-to-$18.51 would put the August 2010 trough at $17.60 on the map.
How to trade Intel earnings
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