Intel (INTC) will report its first-quarter results after the bell on Wednesday, with investors and analysts watching to see whether the PC market recovery and Intel’s AI investments play out for the chip giant.
Intel is looking to expand its AI market share by challenging rivals Nvidia (NVDA) and AMD (AMD) with its new AI accelerator, Gaudi 3, and hopes to win over consumer and corporate customers with its new line of AI PCs .
For the quarter, Wall Street expects Intel to report profit of $0.13 per share on revenue of $12.7 billion, according to consensus data compiled by Bloomberg. The company reported a loss per share of $0.04 on revenue of $11.7 billion in the year-ago quarter.
This quarter will also be the first time Intel reports earnings under its new corporate structure. In April, the company announced that it would now report revenue from its Client Computing Group, Data Center and AI, and Network and Edge businesses in the Intel Products segment. Altera, Mobileye and Other will now report under the All Others segment, while Intel’s Foundry business will report under Intel Foundry.
The Foundry segment will report revenue from both the production of Intel products and chips for third parties. However, in announcing the restructuring, Intel also revealed that its foundry business lost $7 billion last year.
Intel is in the process of transforming itself from a designer and manufacturer of its own chips to a manufacturer of chips for third-party customers. So far, the company has announced that Microsoft (MSFT) will be among its first customers as the Windows maker looks to develop its own custom chips.
The move also puts Intel in direct competition with TSMC (TSM), the world’s largest chipmaker. However, there are doubts that the third-party foundry business will ever be a significant source of revenue.
“The new revelation might upset a [some of all parts]-based valuation that implies hidden value for its foundry efforts, but we remain sober as much of the profitability improvement is parked in the 2027+ time frame and it appears that Intel is still at around 75% even in 2030 % will be an Intel Foundry customer. wrote Timothy Arcuri, an analyst at UBS Global Research, in a recent research note.
During the previous quarter’s earnings conference call, CFO David Zinsner said that the company expects its data center and AI business revenue to decline by a double-digit percentage in the first quarter compared to the previous quarter. However, at the time, CEO Pat Gelsinger said that such quarter-over-quarter declines were more seasonal. But given Nvidia’s soaring AI sales, Intel’s performance on Wall Street leaves much to be desired.
Intel also wants to benefit from the AI enthusiasm in the PC market with its new Core Ultra processors. The chips, which have built-in neural processing units (NPUs), are designed to run AI models on your laptop rather than in the cloud. The idea is that you can take advantage of AI apps without having to connect to the internet or share your data.
AMD, Intel’s main competitor in the PC space, also offers its own AI PC chips, while Nvidia says laptops running those chips are also considered AI PCs. And on Wednesday, Qualcomm unveiled its Snapdragon X Plus chip, alongside the previously announced Snapdragon
Qualcomm (QCOM) claims its chips can outperform certain Intel Core Ultra and AMD chips in terms of performance and battery life. The company’s new processors will go on sale later this year.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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