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Will Higher Processor Revenues Aid Intel (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 to-be-reported quarter, the company is likely to have recorded higher revenues year over year from the Client Computing Group (CCG) backed by a strong emphasis on product innovation. Efforts to increase efficiency in semiconductor manufacturing and improve the supply chain are positive factors.

Factors at Play

CCG is the company’s largest segment and accounts for the lion’s share of total revenues. It includes computer CPUs, several server boards, form factor systems and graphic products.

During the fourth quarter, Intel launched state-of-the-art Intel Arc A580 desktop graphics. The integrated AI-enhanced Intel Xe Super Sampling and hardware-accelerated ray tracing features ensure superior gaming experiences with realistic visuals. The company also introduced the Intel Core 14th Gen Desktop Processors. The latest generation of desktop processor family includes the i9-14900K, i7-14700K and more. Along with offering best-in-class connectivity, the processors are compatible with 600/700-series chipsets, ensuring an exceptional experience for gamers and creators. These are likely to have generated incremental revenues in the fourth quarter.

In the quarter under review, Intel unveiled the Intel Core Ultra mobile processors for AI PCs. It features the neural processing unit, which enables power-efficient AI acceleration with 2.5x better power efficiency than the previous generation. The built in Intel Arc Graphics provide enhanced 3D graphics performance for a premium gaming experience. This is likely to get reflected in the upcoming results.

Key Developments in Q4

In the to-be-reported quarter, Intel announced that it has 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, is likely to generate significant employment opportunities and foster the economic development of the region. The company expects that the expanded manufacturing capacity will better equip it to regain its leading market position within the semiconductor industry and improve its supply chain mechanism in the region amid the prevailing unrest.

Intel also inked a memorandum of understanding with one of the leading semiconductor companies, Siemens AG. Leveraging respective portfolios, the collaboration aims to augment production efficiency and sustainability in semiconductor manufacturing.

Overall Expectations

The Zacks Consensus Estimate for revenues from the CCG segment is pegged at $8,324.97 million, indicating an increase from $6,625 million in the year-ago quarter. Our estimate for revenues from this segment is pegged at $7,923.3 million, suggesting 19.3% growth year over year.

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.

Earnings Whispers

Our proven model does not conclusively 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. 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 and EPS Surprise

Intel Corporation price-eps-surprise | Intel Corporation Quote

Zacks Rank: Intel currently carries a Zacks Rank #3 (Hold).

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 sports a Zacks Rank of 1. 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.

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