Intel Corp.'s Upcoming Earnings Report: A Deep Dive into Key Markets

Intel Corp. is gearing up to release its highly anticipated earnings report, which is expected to shed light on the latest trends in the personal-computing and data-center markets. Additionally, the report will provide insights into the rapid growth of artificial intelligence (AI) opportunities.

Since the last presentation of its numbers to Wall Street, Intel’s stock has enjoyed a remarkable surge of over 50%. This rally has significantly heightened expectations for the upcoming report, as noted by HSBC analyst Frank Lee in a recent report.

"We acknowledged Intel’s improving execution especially on its PC client side with its improving market share," Lee stated. He believes that the company's revenue and gross margins for the latest period will align closely with the consensus view. However, Lee also notes that due to the recent expansion in the stock's price-to-earnings multiple, there may be limited room for further earnings growth in the short term.

Now, let's take a closer look at what to watch out for in Intel’s fourth-quarter numbers.

Expectations for Q4

Earnings

According to analysts tracked by FactSet, the consensus estimate for adjusted fourth-quarter earnings per share stands at 45 cents, a significant increase from the 10 cents reported in the same period the previous year.

Revenue

FactSet-tracked analysts predict that Intel's revenue for the fourth quarter will reach $15.2 billion, compared to $14.0 billion in the year-ago quarter. The client-computing unit, Intel's largest segment, is expected to experience a substantial revenue increase of 28%, reaching $8.5 billion. In contrast, revenue for the data-center and AI segment is projected to decline by approximately 5%, coming in at $4.1 billion.

Stock Movement

Intel's shares have consistently gained momentum after each of the company's previous three earnings reports. Following the most recent report, the stock witnessed a 9% increase. Over the past 12 months, Intel's stock has soared by an impressive 68%, with a 52% gain over the last three months.

In summary, Intel's upcoming earnings report is eagerly awaited due to its potential insights into key markets and the growing AI sector. The company's strong performance in recent months has set high expectations, and the report will reveal whether Intel continues to exceed market expectations.

Intel's Stock Ratings

According to FactSet, out of the 42 analysts who cover Intel's stock, nine have buy ratings, 27% have hold ratings, and six have sell ratings. The average price target is $44.04, which is approximately 12% lower than recent levels.

Key Points to Consider

HSBC's Analysis

HSBC analyst Lee focuses on Intel's commentary about the PC business. Lee suggests that there might be a downside risk concerning the bullish consensus expectations of its PC client sales, which are estimated at $7.7 billion. This assessment is based on the recent weakness in the overall PC supply chain.

Market for AI PCs

Intel has been relying on AI PCs as part of its strategy. Analyst Matthew Ramsey from TD Cowen highlights the future introduction of AI PCs. He mentions that the debut of Meteor Lake (followed by Arrow Lake, Lunar Lake, and Panther Lake as a follow-on in 2025) positions Intel well in the expanding market for client-side inference workloads.

Evaluation of Intel's AI Narrative

Bernstein analyst Stacy Rasgon suggests that this year will reveal whether there is substance behind Intel's AI narrative. Rasgon believes that, at this stage, the progress seems incremental at best. Intel has proposed a Gaudi pipeline with an estimated value of roughly $2 billion. However, there is little information about the commitments and timing of this pipeline, which Rasgon considers relatively small given Intel's size.

Potential Risk to First-Quarter Figures

Wolfe Research analyst Chris Caso acknowledges the potential for some risk to Intel's first-quarter figures. However, he notes that this risk is mainly due to poor modeling rather than deteriorating conditions.