Intel Revenue Outlook Misses Estimates, Shares Drop
Intel Corp. (INTC) shares declined on Friday after the company issued a revenue forecast below analysts' expectations for the current period.
First-Quarter Revenue Projection
Intel anticipates first-quarter revenue between $11.7 billion and $12.7 billion, falling short of the consensus analyst estimate of $12.85 billion. The company attributed the shortfall to weaker demand and market share loss to competitors.
Earnings Forecast
Intel expects to break even on a non-GAAP basis in the first quarter, compared to the average analyst projection of 8 cents per share. The estimates reflect a challenging competitive environment, according to Intel's CFO Dave Zinsner.
Executive Commentary
Interim Co-CEO Michelle Johnston Holthaus emphasized the need to improve products and manufacturing to regain market share from rivals such as AMD and TSMC. She acknowledged Intel's challenges in developing a viable competitor to Nvidia's AI accelerator chips.
Industry Shift and Competitive Landscape
Intel's rivals have capitalized on the industry shift towards artificial intelligence technology, while Intel continues to face pressure on its market share in PC processors and server chips. TSMC has emerged as a leader in semiconductor manufacturing, providing outsourced services to Intel's competitors.
Financial Performance
Intel's gross margin, a measure of profitability, is projected to decline from 39.2% in the fourth quarter to 33.8% in the current period. The company's earnings are now reported by division, highlighting the challenges facing its manufacturing operations.
Future Outlook
Intel plans to invest approximately $20 billion in new plants and equipment this year, down from its previous estimate of up to $23 billion. The company's Intel Foundry Services unit aims to generate revenue from external customers in 2025 and reach break-even by 2027.