Technology
Friday, October 27th, 2023 1:53 pm EDT
Key Points
- Intel’s Strong Earnings Beat: Intel’s stock saw a remarkable 10% increase in premarket trading after the company reported earnings that surpassed Wall Street’s expectations for both profit and sales. Intel’s earnings per share came in at 41 cents (adjusted), significantly exceeding the LSEG estimate of 22 cents. Additionally, the company posted $14.16 billion in revenue for the quarter, surpassing analyst expectations of $13.53 billion. This strong performance was a significant boost to the company’s stock.
- Challenges and Concerns: Despite the positive reaction to Intel’s earnings beat, there are concerns about the company’s future transformation and its relatively new chip-manufacturing business, the foundry. Analysts from Goldman Sachs expressed caution about Intel’s pursuit of an internal foundry model, and there are concerns about the company’s Data Center wallet share. These concerns reflect mixed sentiment among analysts regarding Intel’s longer-term prospects.
- Positive Aspects and Cost-Saving Initiatives: While there are areas of concern, Intel’s performance in AI and the foundry business received positive feedback from analysts at Morgan Stanley. Additionally, Intel is on track to achieve its goal of $3 billion in savings for the year, which was praised by JPMorgan analysts. They noted that Intel is executing well on its cost-saving initiatives. Looking ahead, the company’s next year of data center product launches and other developments could provide insights into its progress over the next three to five years.
Intel’s stock experienced a significant 10% surge in premarket trading on a Friday morning after the company delivered impressive results that surpassed Wall Street’s expectations for both profit and sales. This surge follows Intel’s announcement of earnings per share (EPS) of 41 cents (adjusted), significantly exceeding the LSEG estimate of 22 cents. The company reported $14.16 billion in revenue for the quarter, surpassing analyst expectations of $13.53 billion, although it represented an 8% decline from the previous year, marking Intel’s seventh consecutive quarter of declining sales.
Several key factors contributed to Intel’s positive performance:
- Strong Demand for PCs: A major driving force behind Intel’s premarket boost was the robust demand for personal computers. This surge in PC demand, driven by remote work and digital transformation needs, played a crucial role in Intel’s strong earnings report.
- Continued Execution of Initiatives: Intel’s ability to remain on course with its strategic initiatives, as previously outlined, garnered investor confidence. This included technological advancements such as achieving five nodes in four years.
- Transformation Challenges and Foundry Business: While the market reacted positively to Intel’s performance, concerns persist regarding the company’s future transformation and its relatively new chip-manufacturing business known as the foundry business. Analysts from Goldman Sachs expressed reservations about Intel’s pursuit of an internal foundry model.
- Data Center and AI Business: Concerns were also raised about Intel’s Data Center wallet share, indicating a mixed sentiment among analysts. While there are concerns in this area, Intel’s AI performance and foundry business received positive feedback from Morgan Stanley analysts.
- Cost-Saving Initiatives: CEO Pat Gelsinger confirmed that Intel is on track to achieve its goal of $3 billion in savings for the year. JPMorgan analysts praised these cost-saving efforts and their positive impact on the company’s financials.
- Long-Term Roadmap: Analysts at Morgan Stanley noted that Intel’s longer-term outlook hinges on the company’s roadmap, emphasizing that Intel needs to demonstrate its commitment to large customers.
In light of these factors, analysts from JPMorgan raised their price target for Intel stock from $35 to $37. They believe that Intel’s upcoming year of data center product launches and other developments could provide valuable insights into the company’s progress over the next three to five years. Despite the positive results, it is acknowledged that the next 12 months may pose challenges for Intel.
In summary, Intel’s stock enjoyed a significant boost following better-than-expected earnings, driven by strong PC demand and the company’s commitment to its strategic initiatives. While there are concerns about Intel’s transformation and foundry business, the company’s performance in AI and cost-saving efforts garnered positive responses from analysts. Intel’s long-term success will depend on its ability to execute its roadmap and address challenges in the data center and foundry sectors.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/27/intel-pops-after-earnings-show-progress-toward-3-billion-in-savings.html
