Intel’s (Nasdaq: INTC) stock experienced a decline on Friday following the release of a fiscal Q1 2024 outlook below expectations. Despite the chip maker reporting better-than-expected earnings and revenues in Q4 2023, the stock closed Friday’s trading session at $43.65, marking an 11.91% decrease from the previous close. Despite this recent dip, the stock has shown a commendable approximately 45% appreciation over the past six months.
The company based in Santa Clara, California, disclosed fourth-quarter revenues of $15.41 billion, marking a 10% increase from $14.04 billion in the corresponding quarter of fiscal 2022. Significantly, Intel has achieved revenue growth after experiencing seven consecutive quarters of decline.
In the fourth quarter ending on December 30, 2023, Intel reported a net income of $2.67 billion, equivalent to $0.63 per share. This marks a notable improvement from the net loss of $664 million, or $0.16 per share, recorded in the quarter ending December 31, 2022.
Excluding adjustments related to acquisitions, share-based compensation, restructuring and other charges, gains on equity investments, gains from divestitures, adjustments linked to non-controlling interest, and income tax effects, among other factors, the company reported a non-GAAP net income of $2.30 billion, equivalent to $0.54 per share, for the fourth quarter of 2023. This represents a notable rise from the $635 million, or $0.15 per share, reported in the fourth quarter of 2022.
LSEG analysts expected Intel to report adjusted earnings of $0.45 per share on revenues amounting to $15.15 billion. Noteworthy is Intel’s Q4 revenue guidance ranging between $14.60 billion and $15.60 billion. Additionally, the company had forecasted fourth-quarter GAAP and non-GAAP earnings at $0.23 and $0.44 per share, respectively.
Commenting on the quarterly results, Pat Gelsinger, Intel CEO, stated, “We delivered strong Q4 results, surpassing expectations for the fourth consecutive quarter with revenue at the higher end of our guidance.”
Segment wise:
- Client Computing Group (CCG) revenues were $8.84 billion, an increase of 33% on a y-o-y basis, and surpassed forecasts of $8.40 billion.
- Data Center and AI (DCAI) group revenues jumped 10% y-o-y to $3.99 billion, but missed forecasts of $4.10 billion.
- Network and Edge (NEX) revenues of $1.47 billion, down 24% from last year.
- Mobileye revenues rose by 13% y-o-y to $637 million.
- Intel Foundry Services (IFS) revenues surged 63% to $291 million but missed forecasts of $343 million.
In the fourth quarter, Intel’s gross margin fell by 2.60% y-o-y to 40%. Notably, the company is currently implementing a plan to transform into a foundry for other chip firms. Additionally, last Wednesday, the company revealed the opening of its chip manufacturing factory in New Mexico.
In the upcoming first quarter of 2024, Intel anticipates revenues within the range of $12.20 billion to $13.20 billion, along with non-GAAP earnings projected at $0.13 per share. Contrastingly, analysts surveyed by LSEG expect Intel to announce adjusted earnings of $0.34 per share on revenues totaling $14.20 billion.
The quarterly earnings beat, coupled with a lower-than-anticipated Q1 outlook, is expected to keep the stock of Intel range-bound in the near term.
Technically, the stock of Intel has broken the 50-day moving average following the announcement of a weak quarterly outlook. The next major support is anticipated to be near $41. Additionally, the stochastic indicator is making lower highs. Therefore, we anticipate the stock price of Intel to remain in a downtrend in the near term.
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