Intel Corp. (Nasdaq: INTC) reported better than anticipated fiscal 2023 third-quarter earnings and revenues. The company also issued an upbeat fourth-quarter outlook. Following the solid results and outlook, the stock of Intel rallied $3.02, or 9.29%, to close at $35.54. Notably, the stock has surged more than 30% so far this year.
The Santa Clara, California-based company reported third-quarter revenues of $14.16 billion, down 8% from $15.34 billion in the third quarter of fiscal 2022. The reported figure reflects the seventh successive quarter of decreasing sales.
For the third quarter, which ended September 30, 2023, the chip maker recorded net income of $297 million, or $0.07 per share, compared with net income of $1.02 billion, or $0.25 per share, in the quarter ended October 1, 2022.
Excluding acquisition-related adjustments, share-based compensation, restructuring, and other charges, losses on equity investments, and gains from divestiture, among others, the 3Q 2023 non-GAAP net income was $1.74 billion, or $0.41 per share, up from $1.53 billion, or $0.37 per share, in 3Q 2022.
Analysts surveyed by Refinitiv had anticipated Intel to post adjusted earnings of $0.22 per share on revenues of $13.53 billion.
Intel’s gross margin was 45.80% in 3Q 2023, almost unchanged from last year. The company’s Chief Financial Officer, David Zinsner, pointed out that Intel’s earnings per share got a boost from a 15% y-o-y decline in operating expenses. Under the cost-cutting plan, Intel’s employee count declined to 120,300 from 131,500 last year.
Segment wise:
- Revenues of Client Computing Group (CCG), which includes PC processor and laptop business, fell by 3% to $7.90% billion, but surpassing estimates of $7.40 billion.
- Data Center and AI (DCAI), encompassing server chips, recorded revenues of $3.80 billion, down 10% from last year. Wall Street analysts were expecting revenues of $3.94 billion.
- Network and Edge (NEX), offering networking hardware, revenues plunged 32% y-o-y to $1.50 billion.
- Mobileye, a listed Intel subsidiary manufacturing autonomous vehicle parts, revenues jumped 18% y-o-y to $530 million.
- Intel Foundry Services (IFS), representing a budding chip-manufacturing division, revenues were $311 million, an increase of 299% from the previous year.
The company’s CEO, Pat Gelsinger, stated that the company would slash operational expenses by roughly $3 billion this year.
The company also revealed that it is on course to reach the level of Taiwan Semiconductor Manufacturing Co.’s chip-making technology by 2025, a strategy Intel refers to as “five nodes in four years.”
Looking ahead, Intel expects 4Q 2023 revenues of between $14.60 billion and $15.60 billion. The company also projects GAAP and non-GAAP earnings of $0.23 and $0.44 per share.
Analysts surveyed by LSEG anticipate Intel to post earnings of $0.32 per share on revenues of $14.31 billion.
Intel also forecasts a non-GAAP gross margin of 46.50% in 4Q 2023, versus analysts’ forecasts of 44.20%.
The quarterly earnings beat and solid Q4 outlook are expected to keep the stock of Intel slightly bullish in the short term.
The historical price chart indicates that the stock of Intel is rising after consolidation at $34 levels. The next resistance is anticipated to be only near $39. Additionally, the stock is trading above its 50-day moving average, while the stochastic indicator is rising towards the bullish region. Therefore, we anticipate the stock price of Intel to remain in an uptrend in the near term.
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