Wall Street Remains Skeptical Ahead of Intel's Quarterly Report
1min read Intel is set to release its quarterly financial report on Thursday, and in Wall Street's view, the results may not be very encouraging.
As losses in the foundry business continue to mount, Wall Street anticipates that Intel's revenue for the third quarter, ending September 30th, will decline by 8%, marking the largest revenue drop in five quarters. This also implies that Intel's share in the data center and personal computer markets is on the decline.
So far this year, Intel's stock price has plummeted over 50%, and its market value has fallen below $100 billion, making it the worst-performing tech giant. This is also linked to Intel's disconnection from the artificial intelligence boom.
On the other hand, although Intel has been promoting its advanced chip foundry technology, 18A, which is set to be launched in 2025, the technology is not yet seen as competitive with TSMC. This has left many investors skeptical and even hoping for Intel to spin off this continuously losing foundry business.
Rosenblatt Securities analyst Hans Mosesmann once commented that Intel shareholders are thinking about two things: "Can it be fixed?" and "Who is it going to be fixed by?"
According to some analysts, a significant part of Intel's losses is attributed to the chip foundry business. Synovus Trust portfolio manager Daniel Morgan and Gabelli Funds analyst Ryuta Makino both stated that Intel's performance would look much better if it sold its foundry business.
The industry estimates that due to substantial investments in operations and expansion of fabs, Intel's foundry division will incur an operating loss of $2.55 billion this quarter, which will drag Intel's gross margin down by more than 7 percentage points, with analysts predicting a drop to 37.9% in the third quarter.
Furthermore, Intel's personal computer division's sales are also not very optimistic, with Wall Street consensus expecting a decline of over 6% in the third quarter.
As a result, Intel's competitor AMD is likely to benefit. AMD, which also has a foothold in personal computer chips, reported good performance in its CPU business in the third quarter, with a year-over-year increase of 26.7%.
At the same time, AMD's growth in the data center business is also very rapid, with its quarterly revenue reaching $3.5 billion, a year-over-year increase of 122%, and a sequential increase of 25%. In contrast, Intel's data center business is expected to see a revenue decline of about 10%, marking the tenth consecutive quarter of decline.
Gabelli Funds' Makino stated that if Intel continues to release negative news while already under Wall Street scrutiny, it would be very surprising. That could indicate that Intel's downward momentum is even stronger than the market thinks.
