When Intel (INTC) releases its first-quarter earnings results on Wednesday after the bell, analysts and investors will be watching to see if the chip giant’s investments in artificial intelligence (AI) and the PC market recovery are paying off.
With its new Gaudi 3 AI accelerator, Intel is attempting to take market share away from competitors Nvidia (NVDA) and AMD (AMD), and it is also hoping to attract enterprise and consumer customers with its new line of AI PCs.
Based on Bloomberg’s consensus data, Wall Street anticipates Intel to report $0.13 earnings per share on $12.7 billion in revenue for the quarter. A $0.04 loss per share was reported by the company.
Intel will also be reporting earnings for the first time under its new corporate structure this quarter. The corporation announced in April that its Client Computing Group, Data Center and AI, and Network and Edge divisions will now report revenue under the Intel Products segment. Intel Foundry will now be the reporting division for Intel, while Altera, Mobileye, and Other will now fall under the All Other Segment.
Chips produced for third parties as well as Intel products will be reported as revenue in the Foundry segment. But, Intel disclosed that its foundry division had suffered a $7 billion loss over the previous year when it announced the reorganization.
In the process of becoming a manufacturer of chips for external customers, Intel is changing from a company that designs and makes its own chips. Microsoft (MSFT), the company that makes Windows, will be among its initial clients, according to information released by the company thus far.
Additionally, the move places Intel squarely against the largest chip manufacturer in the world, TSMC (TSM). The third-party foundry industry, however, is unlikely to be a substantial source of income in the future.
The new disclosure, according to UBS Global Research analyst Timothy Arcuri, “may tease a [some of all parts]-based valuation that implies hidden value for its foundry efforts, but we remain sober as so much of the profitability improvement is parked in the 2027+ timeframe and it appears even in 2030 that Intel will still be a ~75% customer of Intel Foundry.” Early in January, the research note was composed.
In the previous quarter, CFO David Zinsner of Intel stated during the company’s earnings call that revenue for its AI and data center businesses is expected to decline by a double-digit percentage in Q1. Nonetheless, CEO Pat Gelsinger stated at the time that a decline like this is usually seasonal from quarter to quarter. Wall Street has been dissatisfied with Intel’s performance, despite Nvidia’s AI sales being through the roof.
Utilizing its new Core Ultra processors, Intel hopes to leverage the AI craze in the PC market as well. Rather than executing AI models on the cloud, the chips’ integrated neural processing units (NPUs) are meant to run them on your laptop. Using AI apps is supposed to be possible without requiring you to share your data or connect to the internet.
Along with Nvidia, who claims that laptops running its chips are also AI PCs, AMD, Intel’s main rival in the PC market, also offers its own AI PC chips. Qualcomm also unveiled the Snapdragon X Plus chip on Wednesday, joining the previously revealed Snapdragon X Elite as possible competitors to AMD and Intel.
As for performance and battery life, Qualcomm (QCOM) says its chips can beat some AMD and Intel Core Ultra chips. Later in the year, the company’s new processors will be available for purchase.