MW Intel making 'steady progress,' but earnings miss drags down stock by 8%
By Emily Bary and Claudia Assis
Intel's stock losses adds to chip maker's rough year so far
Intel Corp. shares dropped 8% in the extended session Thursday, adding to their rough start to the year as the chip company reported revenue slightly below Wall Street expectations.
The company is "making steady progress against our priorities," Chief Executive Pat Gelsinger said in a statement.
Intel $(INTC)$ reported a first-quarter net loss of $437 million, or 9 cents a share, narrower than a net loss of $2.8 billion, 66 cents a share, in the year-ago period.
On an adjusted basis, Intel earned 18 cents a share, while analysts tracked by FactSet had been looking for 14 cents a share.
Revenue rose 9% to $12.7 billion, whereas analysts were modeling $12.8 billion.
The company recorded $7.5 billion in client computing revenue, which was up 31% from a year before and met Wall Street's expectations for the segment, which includes desktop and notebook products.
Data-center and artificial-intelligence revenue rose 5% to $3 billion, whereas the FactSet consensus was for $3.3 billion.
Intel's foundry business generated $4.4 billion in revenue, down 10% relative to the year before. Intel recently decided to break out its foundry financials, and this is the first official release under the new reporting scheme.
Intel forecast second-quarter 2024 revenue between $12.5 billion and $13.5 billion, and said it is expecting second-quarter adjusted earnings of 10 cents a share.
Intel, like many chip companies, has been fighting to get its hands on lucrative technology budgets that are being poured into AI hardware. But heading into the earnings report, analysts weren't sure if those efforts would manifest meaningfully in the numbers.
Shares of Intel have missed out on the sector's rise so far this year - in a big way. Some of the PHLX Semiconductor Index's SOX gains have recently evaporated, but that chip-sector benchmark is still up 10% thus far in 2024 and outpacing the S&P 500's SPX 6% gain. Intel's stock, by contrast, is off 30% on a year-to-date basis and one of the S&P 500's steepest decliners.
See also: Intel's stock stems its bleeding upon launch of new AI chip
"[R]ecent foundry announcements finally cement the reality thatthe turnaround is only just getting started," Bernstein's Stacy Rasgon wrote earlier this month, in light of the company's foundry disclosures that came out at the start of April. Those showed steep losses for the foundry business that are expected to grow further this year.
On the call, analysts will be looking for commentary on the state of AI spending from customers, relative to outlays for more traditional hardware.
"While we also continue to believe AI server [graphics-processing-unit] purchasing has crowded out [central-processing-unit] wallet share, some have suggested there could be a modest return to traditional server spend in [the second half of the year]," Susquehanna's Christopher Rolland wrote in a preview.
-Emily Bary -Claudia Assis
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 25, 2024 16:21 ET (20:21 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments