Intel (INTC.US) is scheduled to announce its fourth-quarter results after the market closes on Thursday. Wall Street anticipates the chipmaker will report earnings per share (EPS) of $0.08 and revenue of $13.39 billion, indicating a 6% decline in quarterly sales. The company's stock surged over 80% last year, significantly outperforming the broader S&P 500 index, which gained nearly 17% over the same period.
For some time, the Santa Clara, California-based Intel has seen its market share in personal computers (PCs) eroded by rival AMD. However, under the leadership of CEO Pat Gelsinger, the company is executing a transformation strategy that includes substantial cost-cutting measures and a series of notable investments received last year from the likes of Nvidia and SoftBank.
A stake of approximately 10% from the previous U.S. administration, coupled with a massive $11.1 billion investment from the U.S. government, has also significantly bolstered the company's balance sheet. Investors and analysts are now increasingly optimistic that the tailwind from artificial intelligence (AI), combined with the transformation plan, will yield positive results.
Frank Lee, an analyst at HSBC, stated, "We were previously cautious on Intel, primarily considering the overall uncertainty in its client channel, execution headwinds in its foundry business, and a lack of visibility on growth drivers for its core businesses." However, the investment bank added that it now expects a sharp increase in server CPU demand driven by the rise of agentic AI, projecting server shipments to grow 15%-20% year-over-year in fiscal 2026.
UBS analyst Timothy Arcuri commented, "Although supply remains tight, we still see an upside bias for the Q4 results based on strong PC and server demand, and we view the market's expectations for Q1 (March quarter) guidance—roughly in line with normal seasonality—as acceptable, especially given the strong base in the December quarter."
While tightening global memory supply could also pose additional challenges to Intel's transformation, analysts noted that "the 2026 guidance points to a recovery in growth, margin expansion, and business stabilization." Over the past two years, Intel has exceeded EPS expectations 63% of the time and surpassed revenue estimates 75% of the time.
Over the last three months, EPS estimates have seen 16 upward revisions compared to 11 downward revisions, while revenue estimates have experienced 15 upward revisions against 16 downward revisions. Seeking Alpha, its quantitative rating system, and Wall Street analysts all maintain a cautious stance, assigning the stock a "Neutral" rating.
Comments