The world’s largest semiconductor company Intel (INTC Quick QuoteINTC - Free Report) shares dropped more than 11% on Friday after the chipmaker issued an outlook for the first quarter of 2024 that fell shy of analyst forecasts even as results for the latest quarter beat Wall Street estimates.

For the first quarter of fiscal 2024, Intel expects adjusted earnings per share of 13 cents on between $12.2 billion and $13.2 billion in sales, versus LSEG expectations of 33 cents per share on $14.15 billion of revenue, as quoted on CNBC. The company projects a fiscal first-quarter net loss of 25 cents per share on a GAAP basis.

Intel's CEO, Pat Gelsinger, indicated during a discussion with analysts that while the company's primary segments, namely PC and server chips, are expected to perform at the lower end of their typical seasonal spectrum this quarter, the overall revenue will be further impacted due to underperformance in its subsidiary divisions.

Inside the Earnings

The company reported GAAP earnings of $2,669 million or 63 cents per share against a loss of $664 million or a loss of 16 cents per share in the year-ago quarter. The significant improvement was primarily attributable to higher revenues and lower operating expenses.

Non-GAAP earnings in the reported quarter were $2,303 million or 54 cents per share compared with $635 million or 15 cents per share a year ago. The bottom line beat the Zacks Consensus Estimate by 10 cents.

GAAP revenues in the reported quarter were $15,406 million, up from $14,042 million a year ago. The quarterly revenues were well above the high end of the guided range, with better-than-expected performance across all lines of business. The top line beat the Zacks consensus estimate of $15,140 million.

Price Target Implies Likely Slump

Based on short-term price targets offered by 28 analysts, the average price target for Intel comes to $43.18. The forecasts range from a low of $17.00 to a high of $68.00. The average price target represents a decline of 12.86% from the last closing price of $49.55.

Should You Buy the Dip With Intel-Heavy ETFs?

Despite the negative picture, we highlight a few bright points associated with Intel stock.  According to Gartner, a market research firm, Intel remains the largest semiconductor maker by revenue. This position underscores Intel's considerable influence in the semiconductor industry despite the competitive pressures.

Under CEO Gelsinger's leadership, Intel is focusing on a five-year plan initiated in 2021. The company aims to compete with Taiwan Semiconductor Manufacturing Co. in manufacturing services while enhancing its own chip offerings. Gelsinger emphasized the company's progress in its transformation journey, as quoted on CNBC.

Intel has been actively cutting costs, including workforce reductions and divesting smaller business units. Notably, it spun off its programmable chip unit and made its self-driving car subsidiary, Mobileye, an independent entity in 2022. These actions led to a cost reduction of $3 billion last year.

In 2023, Intel paid dividends amounting to $3.1 billion, representing its commitment to returning value to shareholders amidst its ongoing transformation and market challenges.

Time to Buy the Dip in Intel With Semiconductor ETFs?

Intel shares may be displaying a weaker trend following earnings, the entire semiconductor space should not as the higher demand for AI should keep other chip stocks charged-up. Investors can thus buy the dip in Intel with Intel-heavy Chip ETFs, not with the stock itself.

Intel has exposure to ETFs like First Trust Nasdaq Semiconductor ETF (FTXL Quick QuoteFTXL - Free Report) , Strive U.S. Semiconductor ETF (SHOC Quick QuoteSHOC - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ Quick QuoteSOXQ - Free Report) , and iShares Semiconductor ETF (SOXX Quick QuoteSOXX - Free Report) . These ETFs have exposure to Intel in the range of 9.5% to 5.9%.