Intel shares fall 10% in reaction to poor Q1 outlook

Intel, the renowned technology company, released its fourth-quarter earnings report, revealing mixed results for the period. The company beat top and bottom line expectations for Q4 but provided a weak outlook for the first quarter of 2024, leading to a 10% decline in the stock in after hours trade. 

During the fourth quarter of 2023, Intel recorded revenue of $15.4 billion, representing a 10 percent year-over-year (YoY) growth. Intel's revenues for the fourth quarter were primarily driven by its Client Computing segment, which generated $8.84 billion in revenue. The Datacenter & AI revenue totaled $4.0 billion, while Network & Edge revenue reached $1.47 billion. Additionally, Mobileye, Intel's subsidiary specializing in autonomous driving technology, reported revenue of $637 million.

Earnings per share (EPS) for the fourth quarter were $0.63 for Intel, while non-GAAP EPS was reported at $0.54. Adjusted gross margins were 48.8%, outpacing expectations of 46.5%, Operating margin came in at 16.7% compared to expectations of approximately 13.9%. 

Looking ahead to the first quarter of 2024, Intel forecasts revenue in the range of $12.2 billion to $13.2 billion. The company also expects non-GAAP EPS to be $0.13 for the first quarter. below analyst forecasts of $0.34. Intel's forecast for Q1 anticipates an adjusted gross margin of 44.5%, a decline of 430 bps from Q4. 

These forecasts indicate a challenging start to the year for Intel and may contribute to market uncertainty surrounding the company's prospects. 

The company achieved its goal of $3 billion in cost savings for 2023. Intel anticipates further efficiencies in 2024 and beyond, driven by the implementation of its new internal foundry model. Intel remains optimistic about unlocking further efficiencies in 2024. This optimism is rooted in the implementation of its new internal foundry model, designed to increase transparency, accountability, and higher returns on capital invested by its shareholders.

Intel's outlook for the first quarter of 2024 suggests a challenging start to the year. Observers will carefully monitor the company's performance and the implementation of its internal foundry model to assess its ability to regain growth momentum and deliver favorable results going forward.

The upcoming shipment of its fifth-generation Intel Xeon processors with original equipment manufacturers (OEMs) by early next month signals the tech giant's ongoing efforts to innovate and meet the demanding needs of its customers. Moreover, Intel's progress in achieving its goal of five nodes in four years demonstrates the company's dedication to technological advancements.

In summary, Intel's fourth-quarter earnings report showcases the company's ability to drive operational efficiencies and deliver substantial cost savings, despite the ongoing challenges faced by the tech industry. With an eye on the future, Intel's strategic initiatives and product launches are expected to contribute to its continued growth and success in the coming quarters.

$INTC(INTC)