Despite continued revenue decreases in the most recent quarter, Intel Corp. surpassed its expectations on a carefully monitored margin statistic, suggesting that the company was beginning to recover financially as Chips Act funds started to flow.
Nevertheless, the company’s first-quarter outlook for the top and bottom lines fell short of projections.
Intel (INTC) forecasted quarterly revenue between $11.7 billion and $12.7 billion, which is less than the $12.9 billion that is currently anticipated. According to John Pitzer, corporate vice president of investor relations at Intel, the company anticipates a more severe sequential slowdown than it usually observes for the first quarter because of macroeconomic uncertainty and the possibility that some customers purchased products in advance in anticipation of tariffs from the Trump administration.
The chipmaker’s fourth-quarter adjusted gross margin of 42.1% exceeded its projected margin of 39.5%. That is higher than the 18% level observed in the third quarter, when Intel took a number of restructuring costs, but lower than the 48.8% level during the same period last year.
In a statement, interim Co-Chief Executive David Zinsner stated, “The cost-reduction plan we announced last year to improve the trajectory of the company is having an impact.” “We are fostering a culture of efficiency across the business.”
After-hours trading on Thursday saw a 2% increase in Intel’s stock price.
Pitzer pointed out that since Intel is a fixed-cost company, revenue growth is possible. Additionally, the business benefited from the Chips Act grants it began receiving, which serve as a contra-expense item.
According to Intel’s prediction, adjusted gross margins will decrease sequentially in the first quarter, reaching 36.0%. This sequential decline partially reflects the benefits of the Chips Act in the fourth quarter, but it also reflects the fact that reduced revenue is anticipated in the quarter.
“We think from Q1 levels, we will see improvement throughout the year,” Pitzer stated.
Despite a 7% decline in revenue to $14.3 billion in the most recent quarter, Intel’s revenue exceeded analysts’ projections of $13.8 billion.
Client computing, Intel’s largest business unit, saw a 9% decline in revenue to $8.0 billion, above the $7.8 billion FactSet consensus.
While network and edge revenue increased 10% to $1.6 billion, exceeding projections of $1.5 billion, data-center and AI revenue decreased 3% to $3.4 billion, which was consistent with expectations.
Pitzer pointed out that although Intel’s artificial intelligence division hasn’t performed as expected financially, the company still engages in AI in other ways.
“AI is not just going to happen in the hyperscale data center,” he stated. “As models become more efficient and we see better scaling, you’re going to see AI move out into the enterprise, into the quiet and into the edge.”
According to him, Intel intends to solidify its position as the industry leader in AI personal computers this year.
Revenue for the foundry company, meanwhile, fell 13% to $4.5 billion, but this was expected.
After making $2.67 billion, or 63 cents per share, in the same quarter last year, the corporation experienced a sharp decline to a net loss of $126 million, or 3 cents per share.
Adjusted profits per share of 13 cents exceeded the FactSet average of 12 cents when nonrecurring things like share-based compensation and favorable income-tax effects were taken out of the equation.
Analysts were projecting an EPS of 9 cents for the first quarter, but Intel stated that it intends to break even on an adjusted per-share basis.
