Intel Corporation INTC is scheduled to report fourth-quarter 2024 earnings after the closing bell on Jan. 30. The Zacks Consensus Estimate for sales and earnings is pegged at $13.77 billion and 12 cents per share, respectively. Over the past 60 days, estimates for INTC have remained steady at a loss of 14 cents per share for 2024 but declined from earnings of 94 cents per share to 92 cents for 2025.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
INTC Estimate Trend
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Earnings Surprise History
The leading semiconductor manufacturer delivered a four-quarter earnings surprise of negative 363%, on average, beating estimates only twice. In the last reported quarter, the company’s earnings surprise was negative 1,433.3%.
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Earnings Whispers
Our proven model does not predict an earnings beat for Intel for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel currently has an ESP of 0.00% with a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
During the quarter, Intel collaborated with EQTY Lab and NVIDIA Corporation NVDA to launch the Verifiable Compute AI (artificial intelligence) framework to govern and audit AI workflows. This hardware-based solution helps to ensure that AI is accountable and secure at runtime, offering consumers and businesses added confidence to accelerate AI adoption and development.
Intel also extended its collaboration with Karma Automotive to showcase the power of their jointly developed Software Defined Vehicle Architecture (SDVA) solution. This solution aims to redefine the automotive industry by creating intelligent, efficient and sustainable vehicles by leveraging Intel's expertise in computing and software technology. These are likely to have generated incremental revenues in the quarter.
However, Intel lagged NVIDIA on the innovation front with the latter’s H100 and Blackwell graphics processing units (GPUs) being runaway success. An accelerated ramp-up of AI PCs is likely to have affected the short-term margins of Intel as it shifted production to its high-volume facility in Ireland, where wafer costs are typically higher. Margins are also likely to have been adversely impacted by higher charges related to non-core businesses, charges associated with unused capacity and an unfavorable product mix. Consequently, Intel restructured its top management in the quarter to fuel its growth engine.
Moreover, China's purported move to replace U.S.-made chips with domestic alternatives could significantly affect Intel as it derives a significant portion of its revenues from the communist nation. The recent directive to phase out foreign chips from key telecom networks by 2027 underscores Beijing's accelerating efforts to reduce reliance on Western technology amid escalating U.S.-China tensions. As Washington tightens restrictions on high-tech exports to China, Beijing has intensified its push for self-sufficiency in critical industries. This shift poses a dual challenge for Intel, as it faces potential market restrictions and increased competition from domestic chipmakers like Advanced Micro Devices, Inc. AMD and NVIDIA. These are likely to have adversely impacted its bottom line in the quarter.
Price Performance
Over the past year, Intel has lost 53.5% against the industry’s growth of 97.4%, lagging its peers.
One-Year INTC Stock Performance
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Key Valuation Metric
From a valuation standpoint, Intel appears to be relatively cheaper than the industry and below its mean. Going by the price/sales ratio, the company shares currently trade at 1.57 forward sales, lower than 21.55 for the industry and the stock’s mean of 2.64.
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Investment Considerations
Intel's innovative AI solutions are set to benefit the broader semiconductor ecosystem by driving down costs, improving performance and fostering an open, scalable AI environment. The company has received $7.86 billion in direct funding from the U.S. Department of Commerce for its commercial semiconductor manufacturing projects under the U.S. CHIPS and Science Act. The funds will support Intel in advancing critical semiconductor manufacturing and advanced packaging projects in Arizona, New Mexico, Ohio and Oregon, likely paving the way for innovation and growth.
However, increasing competition from other established players and emerging China-based firms is likely to adversely impact its bottom line. The communist nation’s stonewalling efforts and push for technological autonomy could reshape the dynamics of the semiconductor industry and affect Intel’s performance to a large extent. Management further observed that Intel needs to witness a significant cultural change to transition from Integrated Device Manufacturing to being a world-class foundry. This would involve a shift from a “no wafer left behind” mindset, where the company built extra capacity to meet demand (hoping that the added capacity would not be idle at any time) to a “no capital left behind” mindset that aims to drive efficiency by eking out every wafer possible from the existing capacity.
End Note
Intel's strategy for open, scalable AI systems extends beyond hardware, encompassing software, frameworks and tools. By fostering a broad ecosystem of AI players, including equipment manufacturers, database providers and software developers, Intel aims to offer enterprises a diverse range of solutions that cater to their unique GenAI requirements. This collaborative approach not only promotes innovation but also enhances interoperability and compatibility, empowering enterprises to leverage existing ecosystem partners with confidence.
However, it appears that the recent product launches are “too little too late” for Intel. With declining earnings estimates and abysmal price performance compared with its peers, the stock is witnessing a negative investor perception, although it is trading relatively cheaply. Intel seems to be treading in the middle of the road and investors could be better off if they trade with caution.
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