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Intel (INTC) Q4 Earnings Preview: Client Computing, Data Centers, IoT & More

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Shares of Intel (INTC - Free Report) have surged 11% since Christmas along with giants like Amazon (AMZN - Free Report) , Facebook (FB - Free Report) , and much of the market. Despite this climb, INTC stock rests roughly 17% below its 52-week high and fell over 1.9% Tuesday on the back of global growth concerns.

Now, let’s see what investors should expect from Intel’s fourth-quarter financial results, including data centers and Internet of Things, ahead of the firm’s Q4 earnings release Thursday.

Quick Economic Overview

Intel is the world’s largest semiconductor manufacturer, which means Wall Street will likely use its quarterly results to help gauge the global economy. As the trade war between the world’s two largest economies marches on, many fear that a slowdown in China will lead to slower global growth. Apple’s (AAPL - Free Report) lowered quarterly guidance helped kick these fears into overdrive to start the year.

Reports in the coming weeks from the likes of IBM (IBM - Free Report) , Microsoft (MSFT - Free Report) , Texas Instruments (TXN - Free Report) , Nvidia (NVDA - Free Report) , and many more giants might help clarify the global economic conditions.

 

Outlook

Moving onto Intel specifically, investors should look for any updates on its next-generation chips, which have been delayed to the delight of rivals like Advanced Micro Devices (AMD - Free Report) . Last we heard, interim CEO Robert Swan said Intel is on track launch its 10-nanometer-based systems by the 2019 holiday season.

At the moment, our Zacks Consensus Estimate calls for Intel’s Q4 revenues to jump 11.5% to reach $19.01 billion. Investors should note that this would mark a slowdown from Q3’s 19% growth, but would top the prior-year quarter’s 4% top-line expansion.

Meanwhile, Intel’s adjusted Q4 earnings are projected to surge nearly 13% to reach $1.22 per share. This bottom-line estimate would also represent a significant slowdown from Q3’s 39% top-line growth and Q4 2017’s 37% climb.

With that said, investors need to know what to expect from Intel’s three largest business units as they could determine how INTC stock trades following its earnings release, especially in the near-term. Luckily, we can turn to our exclusive non-financial metrics consensus estimate file to help.

The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Client Computing

Intel’s largest business unit remains Client Computing, which primarily consists of the company's PC processor and related component sales. This division is projected to jump roughly 9.9% from $8.954 billion in the year-ago quarter to reach $9.841 billion in Q4.

Investors should note that Client Computing revenues surged 15.5% in the third quarter.

Data Center

The firm’s Data Center business has become hugely important in the cloud computing age and is geared toward enterprise-level businesses and governments. Intel’s DC group is projected to surge 23.5% from $5.582 billion in Q4 2017 to reach $6.894 billion. Last quarter, this key unit’s revenues climbed nearly 26%.

Internet of Things

Lastly, Intel’s IoT division is expected to reach $790.75 million. This would mark a 10% decline from the year-ago period’s $879 million, which might make some investors nervous. Plus, IoT revenues popped over 8% in Q3.

Bottom Line

Intel is currently a Zacks Rank #2 (Buy) based on its recent earnings revision trends that also sports an “A” grade for Growth and a “B” for Value in our Style Scores system. With that said, investors might not like how some of INTC’s current Q4 estimates compare to Q3’s results.  

Intel is expected to report its Q4 financial results after the market closes on Thursday, January 24. Make sure to come back to Zacks for a complete breakdown of INTC’s actual Q4 results.

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