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Intel (INTC) stock fell more than 10% in premarket trading on Friday after the company reported better-than-expected fourth-quarter results but provided a weaker-than-expected outlook for the current quarter.
Intel on Thursday said it expects first-quarter adjusted earnings per share to total $0.13, well below analysts’ expectations of $0.34, according to Bloomberg data. This quarter’s revenue is expected to be from $12.2 billion to $13.2 billion. Analysts had expected first-quarter sales to be close to $14.2 billion.
In the fourth quarter, Intel had adjusted earnings per share of $0.54, beating analysts’ expectations of $0.44, and revenue of $15.4 billion, beating estimates of $15.2 billion.
CFO David Zinsner said the company was “comfortably on track” to achieve cost savings of more than $3 billion in 2023.
Looking at the company’s business units, Intel’s data center and AI divisions also underperformed expectations, with fourth-quarter sales of $4 billion, below expectations of $4.1 billion. This was a 10% decrease compared to the same period last year.
The data center and AI businesses are an opportunity for Intel to take on rivals like NVIDIA (NVDA) and AMD (AMD). In December, CEO Pat Gelsinger unveiled the company’s upcoming Gaudi3 accelerator, designed to power generative AI software and services.
The company’s Client Computing Group had fourth-quarter revenue of $8.8 billion, beating analysts’ estimates of $8.4 billion and increasing 33% from a year earlier.
The company is also in the midst of plans to become a foundry for other chip companies. Sales for the company’s Intel Foundry Services division in the quarter were expected to be $291 million, lower than analysts’ expectations of $343 million.
Intel announced Wednesday that it has opened a state-of-the-art chip manufacturing facility in New Mexico. Intel is in the midst of a multiyear turnaround effort to bring the semiconductor maker back to the top of the chip world after losing manufacturing leadership and market share to rivals like TSMC and AMD.
Intel’s results come as the company looks to make a real push into its AI, with the debut of its Core Ultra series of PC chips in December, which will allow consumers to power their laptops and desktops. It is said that it will be possible to directly run AI applications.
Gelsinger said in a press release that the company will continue to “achieve process and product leadership this year, continue to build out its external foundry business and large-scale global manufacturing, and leverage AI in every aspect of our business as we drive long-term value.” We remain relentlessly focused on fulfilling our mission of bringing it to every location.” For those involved. ”
Over the past six months, Intel stock had risen 45% before Friday’s premarket decline.
Intel expects its Core Ultra chip line to further boost PC sales in the year ahead as consumer and business customers who purchased new laptops and desktops at the beginning of the 2020 pandemic begin looking for replacement devices. .
Core Ultra includes a Neural Processing Unit (NPU) that allows users to run certain AI applications locally on their PC instead of relying on cloud-based applications. The idea is that with NPU a user will be able to access his AI apps without going online. That way, the user’s data does not have to be sent to her AI company’s servers and is securely stored on the device.
However, it is still unclear exactly how useful in-vehicle AI will actually be for consumers. It’s also important to note that even Intel isn’t entirely sure what AI applications will look like, other than a few early examples, such as local versions of apps like ChatGPT and AI image editing software. is recognized.
daniel howley I’m the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
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