Intel Projects Lower-Than-Expected Quarterly Revenue and Profit
Intel Corporation is facing challenges in meeting projected revenue and profit expectations for the first quarter of 2024. On Thursday, the company announced forecasts that fell short of market estimates, with anticipated revenue between $11.7 billion and $12.7 billion. Analysts, on average, had predicted revenue of $12.51 billion.
Financial Forecasts and Market Reactions
In the after-hours trading session, Intel’s shares experienced a decline, dropping by 7 percent. The company is also expecting adjusted earnings per share to break even, significantly lower than the expected earnings of 5 cents per share.
Demand for AI and Supply Chain Challenges
Intel’s forecast comes as the demand for traditional server chips, crucial for artificial intelligence (AI) data centers, continues to rise. Tech giants are rapidly expanding their data center capabilities to enhance AI functionalities. However, finance chief David Zinsner noted that many companies were caught off guard by this surge in demand and have had to expedite upgrades to their aging chip fleets due to diminished networking performance.
Strategic Changes and Investments
Under CEO Pat Gelsinger’s successor, Intel has implemented a turnaround strategy aimed at cost reduction and a streamlined management structure. Notable investments have bolstered confidence in Intel’s recovery, including a $5 billion stake from Nvidia and $2 billion from SoftBank, along with U.S. government support.
Stock Performance and Market Position
After witnessing a more than 60% drop in stock price during 2024, Intel’s shares saw a significant rebound, gaining 84% in 2025. This performance has surpassed the semiconductor industry’s overall growth, which saw a 42% rise. Moreover, in recent weeks, Intel’s stock has surged by more than 40%.
Product Development and Manufacturing Issues
Intel has begun shipping its new “Panther Lake” PC chips, relying on a critical 18A manufacturing technology. Yet, analysts have raised concerns regarding production yields, with reports indicating that only a small proportion of the manufactured chips met quality standards. Improvements in yield rates are slowly being observed month over month, but inferior yields typically lead to margin pressures.
Memory Chip Market Dynamics
- A global shortage of memory chips has led to rising prices.
- This situation has inflated personal computer costs, affecting Intel’s core market.
- Intel anticipates that available supply will reach its lowest level in Q1 before showing signs of recovery in Q2.
Additionally, Intel has been losing market share in the personal computer sector to competitors such as AMD and Arm Holdings. The company’s ongoing adjustments and developments highlight its efforts to navigate a rapidly evolving tech landscape.
