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Intel has just had a big year, and investors are learning more about what to expect next.
The company is recovering from its lows, and its next report, released Thursday afternoon, will confirm that. Adjusted earnings per share could increase by more than 300% year over year, and sales are expected to increase by 8%.
However, Intel
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As the company prepares to restart its foundry operations and works to capture enthusiastic spending on artificial intelligence, it still faces many uncertainties. Bernstein’s Stacey Rasgon recently wrote: “This year is shaping up to be a make-or-break year for Inter, with a lot of events, moves and changes on the horizon.”
He noted that Intel will begin financial reporting for its manufacturing business in the first quarter and aims to reduce its cost of goods sold by at least $5 billion by 2025, citing the business’ difficult economic conditions. However, the timing of these layoffs is an “open question,” Razgon said.
See also: Nvidia is no longer Morgan Stanley’s top chip choice. He has a very different name.
Additionally, there are “controversial” areas within the core business, such as the PC market, which appears to have recovered compared to pre-pandemic levels. But at the same time, Razgon noted that data points such as fourth-quarter shipments are worth keeping an eye on as they potentially indicate some weakness.
This is also the essence of our role as a chip manufacturer. “Investors will be left wondering whether Intel can continue to execute on its process roadmap, which is clearly on track for now (at least according to management), and even if it does, whether there will be any changes. “We’re waiting,” he said. I have written.
The company’s upcoming earnings release should provide new insight into management’s expectations for Intel’s various pieces of the puzzle, but Rasgon doesn’t know if management will issue an annual forecast.
Intel stock has dramatically underperformed over the past five years, with a roughly flat performance compared to the S&P 500 SPX’s 84% rise and the PHLX Semiconductor Index SOX’s 272% rise over that period. However, the company has been riding a strong recent rally, gaining 44% over the past three months, outpacing both the S&P 500 Index (up 15%) and the PHLX Semiconductor Index (up 34%).
“We do not think this is a good tactical setup for the stock given its recent strong rally,” UBS analyst Timothy Arcuri wrote in a note to clients last week.
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Part of Intel’s recent stock rally has hinged on optimism that the company can capitalize on AI hardware spending, and it remains to be seen how that story will play out.
“We continue to focus on Intel’s ability to increasingly participate in the rapidly growing (and undersupplied) data center AI market with its upcoming Gaudi3 AI processor,” said Wells Fargo’s Aaron Lakers. “I will,” he wrote. “We expect Intel to reiterate its commitment to unveil Gaudi3 in early 2024 and highlight the growth in its pipeline. That quantification will occur in stages. It will be.”
opinion: How Nvidia and AI are changing the landscape of the chip industry as rivals scramble to catch up
Meanwhile, Raymond James analyst Srini Pajjuri noted comments about the nascent AI PC market, which she described as “presenting further opportunities as applications such as MSFT Copilot become more widely adopted. “Possible new opportunities.”
opinion: Intel has big plans for AI-enabled PCs, but it may take time for them to become widespread.
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