Intel Q4 earnings 🕤 What to await in Q4 2023 report?

Technology giant Intel (INTC.US) will report Q4 2023 results, today, after the Wall Street session. The industry expects that processor sales may be past their cyclical low, and considerable optimism around AI means that the results could be positively received by the market. Of course, if Intel manages to gain at least some market share in a growing AI market. The company has long been trying to rebuild its position as a global chipmaker, after losing market share to TSMC (TSM.US) and AMD (AMD.US). Will the results challenge the status quo and the enthusiasm of technology investors enough; will the company provide more optimistic forecasts for the rest of the year?

Revenues: $15.2 billion vs. $14 billion in Q4 2022

Earnings per share (EPS): $0.44 vs. $0.10 in Q4 2022

Analysts will want to know if Intel has a chance to regain a sizable share of the market for chips used in servers, and if it will be able to provide accurate guidance, for 2024, along with the capabilities of new 'AI computers'. Some forecasts assume that the cyclical recovery of semiconductors, will support the company in 2024, at a time when PC inventories are falling. However, Wolf Research analysts expect fundamental factors to weigh against Intel, which is facing lower cash flow, declining margins and share in a rapidly evolving market. Analysts has become somewhat more optimistic about contract services for chip manufacturing, so-called 'foundries'. These are expected to bring Intel about $343 million in revenue in the new quarter, compared to less than $180 million in Q4 2022. The company's CEO, Gelsinger in December indicated that the company was finalizing a deal with a third-party customer (out of two so far).

Core Ultra gives a hope?

• Intel is trying to promote its own AI in the wave of Core Ultra chips, for PCs (debuting in December 2023). W. Intel will allow them to run AI applications, directly on laptops and desktops, and improve sales performance in 2024.
• Also due to 'cyclicality' - the company estimates that consumers and corporate customers who bought new laptops and desktops at the start of the pandemic will slowly start looking for more powerful replacement devices. Wall Street, too, has reason to believe that the computer market will gradually emerge from its seasonal slump in 2024. Revenue from the computer segment is expected to reach $8.4 billion, compared to $6.6 billion in Q4 2022. 
• Core Ultra includes a so-called NPU, which allows computers to run some AI applications without the required access to the cloud (no online status required). According to analysts, this may be of interest to companies and those seeking greater privacy.
• It is still unclear how useful embedded AI will be for consumers, as Intel itself is unsure what it will offer beyond a GPT-like chatbot or image editing tools. Against this backdrop, we can expect that any announcement indicating that Intel will not be an AI 'marauder' could bring quite a positive surprise.

Data centers and AI

Wall Street will pay considerable attention to Intel's data center and AI revenues. These are expected to be around $4.1 billion in Q4 2023, compared to $4.4 billion in Q4 2022. Here Wall Street can be seen to be quite skeptical, and it seems that this is the segment that will electrify investors the most, especially after CEO Pat Galsinger suggested that the AI & Data Centers business is Intel's chance to beat rivals Nvidia and AMD. In December, the company unveiled Gaudi3, an AI gas pedal dedicated to software AI, with a particular focus on generative AI. On Wednesday, Intel announced the opening of its newest chip manufacturing facility in New Mexico. 

Intel shares (INTC.US)

Source: xStation5