Intel shares fall after company provides weak forecast for the current quarter

Intel released first-quarter profits on Thursday, exceeding Wall Street estimates for earnings per share but falling short on sales. Intel provided a dismal forecast for the current quarter.

The stock plunged 8% during prolonged trading.

Here’s how Intel performed compared to LSEG consensus predictions for the quarter ended in March:

Earnings per share: 18 cents adjusted, compared to 14 cents projected
Revenue: $12.72 billion, compared to $12.78 billion predicted

Intel anticipates second-quarter earnings of 10 cents per share on $13 billion in revenue. This prediction compared with analysts’ expectations of 25 cents per share on $13.57 billion in sales.

Intel’s first-quarter net loss was $400 million, or 9 cents per share, compared to a net loss of $2.8 billion, or 66 cents per share, the previous year.

Revenue rose 9% to $12.7 billion from $11.7 billion the previous year.

During an earnings call, Intel CEO Pat Gelsinger urged investors to focus on the company’s long-term potential.

“We are one of two, maybe three, companies in the world that can continue to enable next-generation chip technologies,” he went on to say.

The quarterly earnings release was the first since the firm announced that its chip manufacturing division, Intel Foundry, would be treated as a separate line item with its own costs and sales.

Intel Foundry recorded $4.4 billion in revenue for the quarter, a 10% decrease year on year, the company said. The unit recorded a $2.5 billion operating deficit in the March quarter. Last month, Intel reported a $7 billion operational deficit in its foundry for 2023.

Intel’s greatest business is the chips it manufactures for PCs and laptops, which are referred to as Client Computing sales. Chip sales totaled $7.5 billion, a 31% increase from the previous year.

Intel also manufactures central CPUs for servers, as well as other parts and software, which are reported under its Data Center and AI businesses. That line’s sales increased 5% to $3 billion, despite Intel’s ongoing battle for server dollars against artificial intelligence processors created by businesses such as NVIDIA.

Earlier this month, Intel announced the release of Gaudi 3, a new AI processor for servers designed to compete with Nvidia’s popular graphics processing units, albeit it will not be available until later this year. Intel estimated that its Gaudi 3 processors will generate more than $500 million in sales in the second half of the year.