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Will Lower Data Center Revenues Dent Intel (INTC) Q4 Earnings?
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Intel Corporation (INTC - Free Report) is scheduled to report fourth-quarter 2022 results after the closing bell on Jan 26. In the fourth quarter, the company is likely to have recorded lower revenues from the Datacenter and AI Group (DCAI) segment due to dwindling PC sales, supply chain adversities and an uncertain macroeconomic environment.
Factors at Play
The DCAI segment seeks to develop leading data center products, including Intel Xeon servers and field programmable gate array products, while overseeing the overall artificial intelligence (AI) strategy.
In the to-be-reported quarter, Intel unveiled the 2023 version of the oneAPI tools that will support the upcoming 4th Gen Xeon Scalable processors, Xeon CPU Max Series and Data Center GPUs (released in January 2023). In addition to improved performance and productivity enhancements, the tools offer support for new Codeplay plug-ins that make it easier for developers to write SYCL code for non-Intel GPU architectures.
However, delay in 7 nm process-based chips, renamed Intel 4, is a major concern. The company detected a defect mode in the 7 nm process, which caused yield degradation. Notably, Intel’s chips utilize process technologies that are designed in-house. After much delay, Intel released the data center GPU design, Ponte Vecchio, in November 2022. The chipmaker now expects initial production shipments of the first Intel-based 7 nm client CPU in early 2023. Moreover, initial production shipments of Intel’s first in-house-based 7-nm data center CPU design are scheduled in the first half of 2023. All these are likely to affect the segment’s revenues.
In addition, deteriorating PC sales owing to market saturation, supply chain woes, inflationary pressures and a challenging macroeconomic environment are likely to have weighed on the company’s top-line performance. Intel is also witnessing intensifying competition in the server, storage and networking markets.
Overall Expectations
The Zacks Consensus Estimate for revenues from the DCAI segment is pegged at $4,094 million, indicating a decline from $7,306 million reported in the year-ago quarter.
The Zacks Consensus Estimate for total revenues of the company stands at pegged at $14,462 million, which indicates a decline from the year-ago quarter’s reported figure of $19,532 million. The consensus estimate for adjusted earnings per share stands at 20 cents, suggesting a sharp fall from $1.09 reported in the prior year.
Earnings Whispers
Our proven model does not predict an earnings beat for Intel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 20 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Intel currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Applied Materials Inc. (AMAT - Free Report) is +0.17% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 15.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
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Will Lower Data Center Revenues Dent Intel (INTC) Q4 Earnings?
Intel Corporation (INTC - Free Report) is scheduled to report fourth-quarter 2022 results after the closing bell on Jan 26. In the fourth quarter, the company is likely to have recorded lower revenues from the Datacenter and AI Group (DCAI) segment due to dwindling PC sales, supply chain adversities and an uncertain macroeconomic environment.
Factors at Play
The DCAI segment seeks to develop leading data center products, including Intel Xeon servers and field programmable gate array products, while overseeing the overall artificial intelligence (AI) strategy.
In the to-be-reported quarter, Intel unveiled the 2023 version of the oneAPI tools that will support the upcoming 4th Gen Xeon Scalable processors, Xeon CPU Max Series and Data Center GPUs (released in January 2023). In addition to improved performance and productivity enhancements, the tools offer support for new Codeplay plug-ins that make it easier for developers to write SYCL code for non-Intel GPU architectures.
However, delay in 7 nm process-based chips, renamed Intel 4, is a major concern. The company detected a defect mode in the 7 nm process, which caused yield degradation. Notably, Intel’s chips utilize process technologies that are designed in-house. After much delay, Intel released the data center GPU design, Ponte Vecchio, in November 2022. The chipmaker now expects initial production shipments of the first Intel-based 7 nm client CPU in early 2023. Moreover, initial production shipments of Intel’s first in-house-based 7-nm data center CPU design are scheduled in the first half of 2023. All these are likely to affect the segment’s revenues.
In addition, deteriorating PC sales owing to market saturation, supply chain woes, inflationary pressures and a challenging macroeconomic environment are likely to have weighed on the company’s top-line performance. Intel is also witnessing intensifying competition in the server, storage and networking markets.
Overall Expectations
The Zacks Consensus Estimate for revenues from the DCAI segment is pegged at $4,094 million, indicating a decline from $7,306 million reported in the year-ago quarter.
The Zacks Consensus Estimate for total revenues of the company stands at pegged at $14,462 million, which indicates a decline from the year-ago quarter’s reported figure of $19,532 million. The consensus estimate for adjusted earnings per share stands at 20 cents, suggesting a sharp fall from $1.09 reported in the prior year.
Earnings Whispers
Our proven model does not predict an earnings beat for Intel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 20 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Zacks Rank: Intel currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Apple Inc. (AAPL - Free Report) is set to release quarterly numbers on Feb 2. It has an Earnings ESP of +0.35% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Applied Materials Inc. (AMAT - Free Report) is +0.17% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 15.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.