Intel reported better-than-expected first-quarter earnings, but the revenue outlook fell short of expectations. The stock market declined by more than 5%.
Intel (Intel) announced its first-quarter earnings report after the market on Thursday, and both revenue and profit exceeded analysts' expectations. However, the company's outlook for the second quarter fell short of Wall Street's expectations, causing the stock price to fall.
Intel said it expects second-quarter revenue of between US$12.5 billion and US$13.5 billion. Analysts had forecast revenue of $13.63 billion for the next quarter.
Intel wants to challenge rivals Nvidia (Nvidia) and AMD by launching a new Gaudi 3 AI accelerator to expand its AI market share, while also attracting consumers and business customers through its AI PC product line.
Intel reported adjusted earnings of $0.18 per share and revenue of $12.72 billion. Wall Street had previously estimated earnings of $0.13 per share and revenue of $12.71 billion, according to compiled consensus data. The company reported a loss of $0.04 per share and revenue of $11.7 billion for the same period last year.
Intel is transitioning from its own chip design and manufacturer to a chip maker for third-party customers. So far, the company has revealed that Microsoft will be one of its first customers as the Windows operating system manufacturer is looking to develop its own custom chips.
The first quarter was the first time Intel reported earnings under its new corporate structure. The company currently reports revenue for its customer computing group, data center and artificial intelligence, and network and edge divisions under Intel's product divisions. Altera, Mobileye, and Other now belong to all other divisions, while Intel's foundry business is part of the Intel Foundry Division.
Foundry revenue comes from the production of Intel and third-party chips. However, while announcing the restructuring, Intel also revealed that its foundry business lost 7 billion US dollars last year.
The move will put Intel in direct competition with TSMC (TSMC), the world's largest chipmaker. However, there are doubts that the third-party foundry business will always be an important source of revenue.
Intel wants to take advantage of the artificial intelligence boom in the PC market to launch a new Core superprocessor. These chips have built-in neural processing units (NPUs) and are designed to run artificial intelligence models on laptops rather than in the cloud. The idea is that you can take advantage of artificial intelligence apps without having to be connected to a network or share your data.
Intel's main competitor in the personal computer field, AMD, is also supplying its own artificial intelligence PC chips, and Nvidia said that laptops running its chips are also considered artificial intelligence PCs. On Wednesday, Qualcomm launched the Snapdragon X Plus chip, as well as the previously announced Snapdragon X Elite, as potential rivals to Intel and AMD.
Qualcomm (Qualcomm) claims that its chips can surpass some of Intel Core Ultra and AMD's chips in terms of performance and battery life. The company's new processors will go on sale later this year.