Intel’s Q4 Earnings: A Mixed Bag
Beating Estimates, But Falling Short on Guidance
Intel’s fourth-quarter earnings report, released on Thursday, brought a mix of good and bad news. The company surpassed estimates on both revenue and earnings per share (EPS), but its guidance for the first quarter fell short of expectations. Despite this, shares of Intel rose 1% following the report.
Leadership in Flux
This earnings report marks the first since Intel ousted CEO Pat Gelsinger, who was tasked with leading the company’s massive turnaround effort. Currently, co-CEOs David Zinsner and Michelle Johnston Holthaus are at the helm, with Zinsner also serving as CFO and Holthaus as CEO of Intel Products. The search for a permanent CEO continues.
Q4 Performance
Intel reported EPS of $0.13 on revenue of $14.3 billion, beating analyst estimates of $0.12 on revenue of $13.8 billion. However, this represents a decline from the same quarter last year, when the company saw EPS of $0.54 and revenue of $15.4 billion.
Q1 Guidance Disappoints
Looking ahead, Intel expects revenue between $11.7 billion and $12.7 billion in the current quarter, falling short of analyst expectations of $12.85 billion. Adjusted gross margins are also expected to come in at 36%, below the 39% anticipated by Wall Street.
Industry-Wide Challenges
Intel is not alone in its struggles. Rival AMD is down 36% over the last year, while Nvidia continues to thrive, rising 93% despite recent concerns related to China’s DeepSeek AI.
Foundry Business Struggles
Intel’s foundry business, which produces chips for both Intel and third-party clients, remains a drag on overall revenue. Despite agreements with major companies, the business brought in $4.5 billion, in line with expectations.
Segment Performance
Intel’s Client Computing business saw revenue of $8 billion, beating expectations, while its data center business topped out at $3.39 billion, slightly above expectations.
PC Market Uncertainty
The PC market, a key segment for Intel, remains flat despite promises that AI-powered PCs would boost sales in 2024. According to IDC, PC shipments rose just 1% in 2024, with uncertainty surrounding 2025.
Data Center Business Lags
Intel’s data center business continues to struggle, failing to catch up to market leaders like Nvidia. While the company is developing its own AI chips, it remains far behind the competition.
A Path Forward
As Intel navigates its leadership transition and industry-wide challenges, the company must focus on revitalizing its business and regaining its footing in the competitive chipmaking landscape.
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