Intel (INTC) experienced a more than 10% drop in premarket trading on Friday following its fourth-quarter results announcement. While the chipmaker reported fourth-quarter results that surpassed estimates, its outlook for the current quarter fell short of expectations, triggering a negative market reaction.
For the first quarter, Intel anticipates adjusted earnings per share of $0.13, significantly below the $0.34 forecasted by analysts. Revenue for the same period is expected to range between $12.2 billion and $13.2 billion, falling short of analysts’ expectations of around $14.2 billion. In contrast, the fourth-quarter results showed adjusted earnings per share of $0.54, surpassing the $0.44 expected by analysts, with revenue reaching $15.4 billion, exceeding the $15.2 billion forecast.
Intel’s CFO, David Zinsner, highlighted the company’s achievement in delivering cost savings exceeding $3 billion in 2023. However, the results for the Data Center and AI unit fell short of expectations, with fourth-quarter revenues totaling $4 billion, a 10% decline from the same quarter the previous year and below Street estimates.
The Client Computing Group posted better-than-expected fourth-quarter sales of $8.8 billion, up 33% from a year ago. Intel is also in the process of transitioning into a foundry for other chip companies, with its Intel foundry services division generating $291 million in revenue during the quarter, slightly below analysts’ expectations.
Intel’s recent efforts include the opening of a new chip manufacturing facility in New Mexico and the launch of its Core Ultra line of PC chips. The company aims to regain its leadership in the semiconductor industry after facing challenges from competitors like TSMC and AMD.
Intel’s CEO, Pat Gelsinger, emphasized the company’s focus on achieving process and product leadership, expanding its external foundry business, and promoting the widespread use of AI. The Core Ultra line includes a neural processing unit (NPU) to run certain AI applications locally on PCs, a move intended to enhance PC sales.
The chipmaker’s results come at a time when it is striving to reinforce its position in the semiconductor market and emphasize its AI capabilities. Intel remains optimistic about the potential of its Core Ultra chips to drive PC sales, particularly as users seek replacement devices after purchasing new laptops and desktops during the early stages of the pandemic in 2020.