Intel (INTC) will report its first quarter results after the bell on Wednesday, with investors and analysts wondering whether the PC market’s recovery and Intel’s investments in AI are paying off for the chip giant.
Intel is looking to increase its AI market share by challenging rivals Nvidia (NVDA) and AMD (AMD) with its new Gaudi 3 AI accelerator, while hoping to woo individuals and businesses with its new line of PC AI.
For the quarter, Wall Street expects Intel to report earnings 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 same quarter last year.
This quarter will also mark the first time that Intel will report results 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 divisions as part of its Intel Products segment. Altera, Mobileye and Other will now fall under the All Others segment, while Intel’s Foundry business will fall 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 over the last year.
Intel is transitioning from being a designer and maker of its own chips to making chips for third-party customers. So far, the company has revealed 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. But it is doubtful that the third-party foundry business will ever be a significant source of revenue.
“The new disclosure could tease a [some of all parts]- a valuation based on hidden value for its foundry efforts, but we remain sober because much of the improvement in profitability is parked in the 2027+ period and it seems even in 2030 that Intel will still be a customer of “About 75% of Intel Foundry,” Timothy Arcuri, an analyst at UBS Global Research, wrote in a recent research note.
During Intel’s previous quarter earnings call, CFO David Zinsner said the company expects to see revenue from its data center and AI businesses decline by a double-digit percentage sequentially in the first quarter. At the time, however, CEO Pat Gelsinger said such a decline was fairly seasonal from quarter to quarter. Yet with Nvidia’s AI sales soaring, Intel’s performance left Wall Street in the lurch.
Intel is also looking to capitalize on the AI craze in the PC market with its new Core Ultra processors. THE…
