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Will Top-Line Expansion Augment Intel's (INTC) Q4 Earnings?
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Intel Corporation (INTC - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 25 after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 95.24%. It pulled off a trailing four-quarter earnings surprise of 136.31%, on average.
The Santa Clara, CA-based semiconductor company is likely to report higher revenues year over year, driven by healthy demand trends in Data Center and AI Group. The introduction of cutting-edge AI-based products is also likely to boost revenues from the Client Computing Group.
Factors at Play
In the fourth quarter, Intel 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 company introduced the 5th Gen Intel Xeon processor family that delivers a 21% average performance gain for general compute, along with a 36% higher average performance per watt across a range of customer workloads. With built-in AI acceleration, optimized software and enhanced telemetry capabilities, the 5th Gen Xeon mainstream data center processor enables more manageable and efficient deployments of demanding network and edge workloads across diverse use cases. This is likely to get reflected in the upcoming results.
In the quarter-under-review, Databricks opted to utilize Intel’s performance optimization application Granulate to enhance its Data Intelligence Platform. This will provide greater scalability to Databricks customers and enable them to securely optimize large-scale Databricks workloads while minimizing cloud infrastructure expenses and R&D efforts. Remark Holdings, Inc., a leading provider of AI-based video analytics, leveraged Intel-powered AI servers for its sales and marketing initiatives. These are likely to have generated incremental revenues in the fourth quarter.
For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $15,140 million, which indicates an increase from the year-ago quarter’s reported figure of $14,042 million. The consensus estimate for adjusted earnings per share stands at 44 cents, suggesting strong growth from 10 cents reported in the prior year.
Key Developments in Q4
During the quarter, Intel disclosed its plans to separate its Programmable Solutions Group (“PSG”) operations into a standalone business. The decision is aimed to provide PSG full autonomy and flexibility to script its own growth trajectory within the FPGA industry that serves as a harbinger of technological innovations across diverse sectors. Despite charting newer frontiers, the two companies are likely to remain strategically aligned and will work in unison to address key areas of the FPGA industry, which is expected to witness a CAGR of more than 9% from $8 billion in revenues in 2023 to $11.5 billion by 2027.
Intel has also inked an agreement with the federal government of Israel to invest $25 billion to expand its chip manufacturing facility in the Middle Eastern country. The investment, dubbed the biggest of its kind in Israel’s history, comes at a time when the country is ravished by the ongoing conflicts with Hamas.
Earnings Whispers
Our proven model does not predict 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. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.32%. 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 NVIDIA Corporation (NVDA - Free Report) is +3.68% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 28.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.46% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
Image: Bigstock
Will Top-Line Expansion Augment Intel's (INTC) Q4 Earnings?
Intel Corporation (INTC - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 25 after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 95.24%. It pulled off a trailing four-quarter earnings surprise of 136.31%, on average.
The Santa Clara, CA-based semiconductor company is likely to report higher revenues year over year, driven by healthy demand trends in Data Center and AI Group. The introduction of cutting-edge AI-based products is also likely to boost revenues from the Client Computing Group.
Factors at Play
In the fourth quarter, Intel 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 company introduced the 5th Gen Intel Xeon processor family that delivers a 21% average performance gain for general compute, along with a 36% higher average performance per watt across a range of customer workloads. With built-in AI acceleration, optimized software and enhanced telemetry capabilities, the 5th Gen Xeon mainstream data center processor enables more manageable and efficient deployments of demanding network and edge workloads across diverse use cases. This is likely to get reflected in the upcoming results.
In the quarter-under-review, Databricks opted to utilize Intel’s performance optimization application Granulate to enhance its Data Intelligence Platform. This will provide greater scalability to Databricks customers and enable them to securely optimize large-scale Databricks workloads while minimizing cloud infrastructure expenses and R&D efforts. Remark Holdings, Inc., a leading provider of AI-based video analytics, leveraged Intel-powered AI servers for its sales and marketing initiatives. These are likely to have generated incremental revenues in the fourth quarter.
For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $15,140 million, which indicates an increase from the year-ago quarter’s reported figure of $14,042 million. The consensus estimate for adjusted earnings per share stands at 44 cents, suggesting strong growth from 10 cents reported in the prior year.
Key Developments in Q4
During the quarter, Intel disclosed its plans to separate its Programmable Solutions Group (“PSG”) operations into a standalone business. The decision is aimed to provide PSG full autonomy and flexibility to script its own growth trajectory within the FPGA industry that serves as a harbinger of technological innovations across diverse sectors. Despite charting newer frontiers, the two companies are likely to remain strategically aligned and will work in unison to address key areas of the FPGA industry, which is expected to witness a CAGR of more than 9% from $8 billion in revenues in 2023 to $11.5 billion by 2027.
Intel has also inked an agreement with the federal government of Israel to invest $25 billion to expand its chip manufacturing facility in the Middle Eastern country. The investment, dubbed the biggest of its kind in Israel’s history, comes at a time when the country is ravished by the ongoing conflicts with Hamas.
Earnings Whispers
Our proven model does not predict 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. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.32%. 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:
InterDigital, Inc. (IDCC - Free Report) is set to release quarterly numbers on Feb 15. It has an Earnings ESP of +1.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NVIDIA Corporation (NVDA - Free Report) is +3.68% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 28.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.46% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.