The forthcoming earnings report from Intel Corporation is expected to be quite eventful, with the chip manufacturer delving into trends in personal processing, data center markets, and the potential for artificial intelligence adoption.
Intel’s stock, INTC, has surged significantly by over 50% since its last financial disclosure to Wall Street, as per the upcoming results scheduled for release on Thursday after the markets close.
In a recent analysis by HSBC’s researcher Frank Lee, the momentum in Intel’s performance has heightened expectations. Lee noted, “We recognize Intel’s enhanced execution, particularly in the PC client segment where it has been gaining market share,” predicting that the company’s revenue and gross margins for the latest period will likely align with the consensus outlook.
However, Lee also pointed out that there may be limited room for further earnings growth in the near future, considering the recent uptick in Intel’s price-to-earnings ratio.
Key points to watch for in the third-quarter data are outlined below.
Key Highlights
Earnings: Analysts, according to FactSet, are forecasting a 45% surge in adjusted fourth-quarter earnings per share, up from 10 cents in the previous year.
Revenue: Intel is expected to have generated \(15.2 billion in revenue for the fourth quarter, compared to \)14.0 billion in the same period last year. The client-computer unit is projected to see a 28% revenue increase to \(8.5 billion, while revenue from data centers and AI is anticipated to decline by 5% to \)4.1 billion.
Stock Performance: Following the last three earnings releases, Intel’s shares have shown an upward trend, with a 9% increase observed after the most recent report. The stock has surged by 68% over the past year and 52% in the previous three quarters.
Despite an average price target of $44.04, around 12% lower than current levels, analysts covering Intel’s stock are divided, with nine recommending buys, 27 holds, and six sells.
Potential Developments
HSBC’s Lee will be closely monitoring Intel’s assessment of the PC industry, particularly in light of recent challenges in the PC supply chain. There might be downside risks to optimistic consensus expectations regarding PC client sales.
The introduction of AI PCs, including the upcoming Meteor Lake, Arrow Lake, Lunar Lake, and Panther Lake models, could play a significant role in Intel’s future strategy, as highlighted by TD Cowen’s Matthew Ramsey.
Investors will scrutinize Intel’s progress in the Artificial Intelligence domain, with questions raised about the company’s narrative and the commitment to the Gaudi pipeline.
While uncertainties persist, Wolfe Research’s Chris Caso acknowledged potential risks to Intel’s first-quarter performance, emphasizing the need for clarity in the company’s strategic direction.
In a noteworthy shift, Nvidia is no longer the top pick for Morgan Stanley in the tech device sector, signaling a unique market dynamic.
