Intel (INTC) announced its first quarter earnings results after the bell on Thursday, beating analysts’ expectations on the top and bottom lines. But the company’s Q2 outlook fell short of Wall Street’s estimates, sending the stock sliding.
Intel said it anticipates Q2 revenue of between $12.5 billion and $13.5 billion. Analysts were anticipating $13.63 billion for the coming quarter.
Intel is looking to grow its AI market share by challenging rivals Nvidia (NVDA) and AMD (AMD) with its new Gaudi 3 AI accelerator while hoping it can woo consumer and enterprise customers with its AI PC lineup.
Intel reported earnings adjusted per share (EPS) of $0.18 on revenue of $12.72 billion. Wall Street was expecting an EPS of $0.13 and revenue of $12.71 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.
Intel is in the midst of transforming itself from a designer and manufacturer of its own chips to a manufacturer of chips for third-party clients. So far, the company has revealed Microsoft (MSFT) will be among its first customers, as the Windows maker looks to develop its own custom chips.
The first quarter marks the first time Intel is reporting earnings under its new corporate structure. The company now reports revenue from its Client Computing Group, Data Center and AI, and Network and Edge divisions under its Intel Products segment. Altera, Mobileye, and Other now report under the All Other Segment, while Intel’s Foundry business reports under Intel Foundry.
Foundry revenue comes from the production of Intel and third-party chips. In announcing the restructuring, however, Intel also revealed that its foundry business lost $7 billion in the last year.
The move puts Intel into direct competition with TSMC (TSM), the world’s largest chip manufacturer. But there are doubts that the third-party foundry business will ever be a significant source of revenue.
Intel is looking to capitalize on the AI craze through the PC market with its new Core Ultra processors. The chips, which feature built-in neural processing units (NPUs), are designed to run AI models on your laptop, rather than in the cloud. The idea is that you can take advantage of AI apps without having to connect to the web or share your data.
AMD, Intel’s chief rival in the PC space, is also offering its own AI PC chips, while Nvidia says laptops running its chips are considered AI PCs as well. And on Wednesday, Qualcomm debuted its Snapdragon X Plus chip to go along with its previously announced Snapdragon X Elite as potential rivals to Intel and AMD.
Qualcomm (QCOM) claims its chips can outpace certain Intel Core Ultra and AMD chips in terms of performance and battery life. The company’s new processors will go on sale later this year.
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