Intel (INTC) will report its first quarter earnings results after the bell on Wednesday, with investors and analysts eyeing whether the recovery in the PC market and Intel’s AI investments are panning out for the chip giant.
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 new AI PC lineup.
For the quarter, Wall Street is expecting 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 Intel reports earnings under its new corporate structure. In April, the company said it will now report revenue from its Client Computing Group, Data Center and AI, and Network and Edge divisions under its Intel Products segment. Altera, Mobileye, and Other will now report under the All Other Segment, while Intel’s Foundry business will report under Intel Foundry.
The Foundry segment will report revenue from both producing Intel products as well as chips for third parties. In announcing the restructuring, however, Intel also revealed that its foundry business lost $7 billion in the 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 move also 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.
“The new disclosure may tease a [some of all parts]-based valuation that implies hidden value for its foundry efforts, but we remain sober as so much of the profitability improvement is parked in the 2027+ timeframe and it appears even in 2030 that Intel will still be a ~75% customer of Intel Foundry,” UBS Global Research analyst Timothy Arcuri wrote in a recent research note.
During Intel’s prior quarter earnings call, CFO David Zinsner said the company expects to see revenue for its Data Center and AI business decline by a double-digit percentage sequentially in Q1. At the time, however, CEO Pat Gelsinger said such a drop is fairly seasonal quarter to quarter. Still, with Nvidia’s AI sales through the roof, Intel’s performance has left Wall Street wanting.
Intel is also 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.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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