Intel Beats Q4 Earnings Expectations but Forecasts Miss Estimates
Intel (INTC) surpassed Wall Street’s expectations for its fourth-quarter earnings, reporting adjusted earnings of 54 cents per share on sales of $15.41 billion. Analysts had predicted earnings of 45 cents per share on sales of $15.16 billion. This marks a significant improvement for the chipmaker, which had seen declining earnings and sales for the past eight and seven quarters, respectively.
Disappointment Strikes as Intel’s Q1 Forecast Falls Short
While Intel’s Q4 results showed signs of growth, the company’s forecast for the first quarter was met with disappointment. Intel predicted adjusted earnings of 13 cents per share on sales of $12.7 billion for Q1. However, analysts had expected earnings of 34 cents per share on sales of $14.24 billion. Intel’s forecast under GAAP suggests the company will report a loss of 25 cents per share in Q1.
Intel Stock Takes a Hit in After-Hours Trading
Following the release of Intel’s Q4 results and forecast, the company’s stock experienced a significant drop in after-hours trading. The stock fell more than 8% to 45.52. During the regular trading session, however, Intel’s stock had risen 0.9% to close at 49.55. Intel saw a breakout in November 2021, with its stock breaking out of a nine-week consolidation pattern at a buy point of 40.07.
Resurgent PC Business Drives Intel’s Q4 Results
Intel’s better-than-expected fourth-quarter results can be attributed to the company’s resurgent PC business. The Client Computing Group, responsible for PC chip sales, reported a 33% increase in revenue to $8.8 billion. While PC chip gains offset declines in the data center and networking chip segments, Intel’s Data Center and AI unit still saw a 10% decline in sales to $4 billion. The Network and Edge business also reported a 24% decrease in sales to $1.5 billion.
Intel Teams Up with United Microelectronics for Semiconductors
In other news, Intel announced a collaboration with contract chipmaker United Microelectronics (UMC) for the development of a 12-nanometer semiconductor process platform. The collaboration aims to address high-growth markets, such as mobile, communication infrastructure, and networking. This announcement follows Intel’s agreement with contract chipmaker Tower Semiconductor (TSEM) in 2021, where Intel will provide foundry services and manufacturing capacity.
Mixed Reactions for Other Semiconductor Stocks
Intel’s disappointing forecast affected other semiconductor stocks as well. Mobileye Global (MBLY), a spinoff of Intel, reported Q4 results in line with expectations. However, its sales forecast for 2024 fell below estimates. On the other hand, European chipmaker STMicroelectronics (STM) posted better-than-expected Q4 earnings but gave a soft guidance for the first quarter. Mobileye’s stock rose 1.2% to $27.95, while STMicro’s shares declined 0.8% to $45.60.
Analyst comment
Heading 1: Positive
Heading 2: Negative
Heading 3: Negative
Heading 4: Mixed
Heading 5: Positive
Heading 6: Mixed
As an analyst, the market is likely to experience volatility in response to Intel’s mixed Q4 results and disappointing Q1 forecast, causing a drop in Intel’s stock price in the short term. However, collaborations with UMC and Tower Semiconductor could contribute to future growth in high-growth markets. Other semiconductor stocks may also be affected, with mixed reactions expected from Mobileye and STMicroelectronics.
