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Intel's (INTC) Outlook Hurt by Mobileye's Revenue Slowdown
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Intel Corporation (INTC - Free Report) is likely to witness a dent in its revenue stream as its subsidiary Mobileye Global Inc. (MBLY - Free Report) expects a substantial downturn in net sales in the first quarter of fiscal 2024.
Mobileye, an industry leader in autonomous driver assistance technology (ADAS), recently announced its Q4 and full-year 2023 preliminary financial metrics and also outlined the financial outlook for fiscal 2024. These selective preliminary metrics provide clarity regarding Mobileye’s business operations and potential impact on the majority stakeholder Intel in the upcoming quarters.
Mobileye expects fourth-quarter 2023 revenues in the range of $634-638 million and full-year 2023 revenues between $2,076-2,080 million. The figures are fairly consistent with the company’s previously provided guidance.
However, management anticipates a staggering 50% net sales drop in the first quarter of fiscal 2024 compared with $458 million revenues in fiscal 2023. Fiscal 2024 revenues are estimated to be $1,830-$1,960 million, suggesting a downturn from the fiscal 2023 tally.
Additionally, for the first quarter of 2024, it expects operating loss to be between $257 million and 242 million. Intel owns an 88% stake in the company, and in the September quarter, it generated $530 million in revenues from solid sales of Mobileye’s EyeQ products. The recent developments will likely hurt Intel’s top-line performance in the upcoming period.
Management has highlighted that the current situation arose from excess inventory build-up at some of Mobileye's tier 1 customers, estimating an excess of about 6-7 million units of EyeQ SoCs in inventory. Nevertheless, this is not an indication of falling demand for driver assistance technology among automakers.
Tier 1 client’s decision to elevate inventory levels was influenced by various factors. Enterprises faced significant headwinds in 2021 and 2022 induced by supply chain constraints. The inventory build-up is a strategic move to minimize the impact of part shortages during supply chain disruptions. Certain OEMs’ decisions to cut production during 2023 also affected customers’ decisions.
Owing to these factors, the projected shipment of EyeQ computer chips is estimated at 31-33 million units in 2024, down from around 37 million units in 2023. Lower shipments will negatively affect the company’s profit margin. Operating loss for the full year 2024 is estimated in the band of $468-378 million compared with an expected loss of around $39-33 million in fiscal 2023.
As demand for ADAS remains strong and the supply chain improves, Mobileye expects excess inventory levels to significantly drop in the first quarter of 2024. Inventory levels will likely normalize by the end of 2024. On the other hand, SuperVision shipments are expected to reach around 175-195K units, up from 100K units in 2023. Owing to these factors, Mobileye expects that revenues from Q2 to Q4 on a combined basis will increase from a flat to a mid-single-digit percentage. This in turn is likely to take a toll on Intel’s overall revenues.
The acquisition of Mobileye has helped Intel to rapidly penetrate the autonomous car technology market, currently dominated by the likes of NVIDIA and Qualcomm. With the buyout, Intel has gained access to Mobileye’s technologies related to cameras, in-car networking, sensor chips, roadway mapping, cloud software, machine learning and data management.
Intel recently launched AI chips for data centers and PCs. This marks one of the largest architectural shifts for the company in 40 years. The strategic decision is primarily aimed at gaining a firmer footing in the expansive AI sector, spanning cloud and enterprise servers to networks, volume clients and ubiquitous edge environments, in tune with the evolving market dynamics.
The stock has gained 63.2% over the past year compared with the industry’s growth of 129%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
United States Cellular Corporation (USM - Free Report) , sporting a Zacks Rank #1 at present, is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular has undertaken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing superior quality network and national coverage. It is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology. The company is well-positioned for continued demand for broadband.
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Intel's (INTC) Outlook Hurt by Mobileye's Revenue Slowdown
Intel Corporation (INTC - Free Report) is likely to witness a dent in its revenue stream as its subsidiary Mobileye Global Inc. (MBLY - Free Report) expects a substantial downturn in net sales in the first quarter of fiscal 2024.
Mobileye, an industry leader in autonomous driver assistance technology (ADAS), recently announced its Q4 and full-year 2023 preliminary financial metrics and also outlined the financial outlook for fiscal 2024. These selective preliminary metrics provide clarity regarding Mobileye’s business operations and potential impact on the majority stakeholder Intel in the upcoming quarters.
Mobileye expects fourth-quarter 2023 revenues in the range of $634-638 million and full-year 2023 revenues between $2,076-2,080 million. The figures are fairly consistent with the company’s previously provided guidance.
However, management anticipates a staggering 50% net sales drop in the first quarter of fiscal 2024 compared with $458 million revenues in fiscal 2023. Fiscal 2024 revenues are estimated to be $1,830-$1,960 million, suggesting a downturn from the fiscal 2023 tally.
Additionally, for the first quarter of 2024, it expects operating loss to be between $257 million and 242 million. Intel owns an 88% stake in the company, and in the September quarter, it generated $530 million in revenues from solid sales of Mobileye’s EyeQ products. The recent developments will likely hurt Intel’s top-line performance in the upcoming period.
Management has highlighted that the current situation arose from excess inventory build-up at some of Mobileye's tier 1 customers, estimating an excess of about 6-7 million units of EyeQ SoCs in inventory. Nevertheless, this is not an indication of falling demand for driver assistance technology among automakers.
Tier 1 client’s decision to elevate inventory levels was influenced by various factors. Enterprises faced significant headwinds in 2021 and 2022 induced by supply chain constraints. The inventory build-up is a strategic move to minimize the impact of part shortages during supply chain disruptions. Certain OEMs’ decisions to cut production during 2023 also affected customers’ decisions.
Owing to these factors, the projected shipment of EyeQ computer chips is estimated at 31-33 million units in 2024, down from around 37 million units in 2023. Lower shipments will negatively affect the company’s profit margin. Operating loss for the full year 2024 is estimated in the band of $468-378 million compared with an expected loss of around $39-33 million in fiscal 2023.
As demand for ADAS remains strong and the supply chain improves, Mobileye expects excess inventory levels to significantly drop in the first quarter of 2024. Inventory levels will likely normalize by the end of 2024. On the other hand, SuperVision shipments are expected to reach around 175-195K units, up from 100K units in 2023. Owing to these factors, Mobileye expects that revenues from Q2 to Q4 on a combined basis will increase from a flat to a mid-single-digit percentage. This in turn is likely to take a toll on Intel’s overall revenues.
The acquisition of Mobileye has helped Intel to rapidly penetrate the autonomous car technology market, currently dominated by the likes of NVIDIA and Qualcomm. With the buyout, Intel has gained access to Mobileye’s technologies related to cameras, in-car networking, sensor chips, roadway mapping, cloud software, machine learning and data management.
Intel recently launched AI chips for data centers and PCs. This marks one of the largest architectural shifts for the company in 40 years. The strategic decision is primarily aimed at gaining a firmer footing in the expansive AI sector, spanning cloud and enterprise servers to networks, volume clients and ubiquitous edge environments, in tune with the evolving market dynamics.
The stock has gained 63.2% over the past year compared with the industry’s growth of 129%.
Image Source: Zacks Investment Research
Intel currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
NVIDIA Corporation (NVDA - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
United States Cellular Corporation (USM - Free Report) , sporting a Zacks Rank #1 at present, is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular has undertaken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing superior quality network and national coverage. It is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology. The company is well-positioned for continued demand for broadband.