Intel (INTC) posted better-than-expected fourth-quarter revenue on Thursday, but its outlook for the first quarter fell short of Wall Street estimates as the chipmaker continues to struggle with tepid demand for its data center processors. Investors, awaiting the appointment of a new CEO, saw shares climb 1.9% in volatile after-hours trading, though the stock remains deeply battered after losing 60% of its value last year. As AI chip spending concentrates on Nvidia (NVDA), Intel has failed to capitalize on the generative AI boom, leaving its traditional server chip business vulnerable to further declines.
For the first quarter, Intel projected revenue between $11.7 billion and $12.7 billion, falling short of the $12.87 billion analysts had expected. Companies are prioritizing specialized AI processors over Intel’s traditional offerings, leading to weaker demand. CFO and interim co-CEO David Zinsner attributed the outlook to "normal seasonality" and potential tariffs from the Trump administration, while reaffirming Intel’s goal to cap operating expenses at $17.5 billion for 2025. Meanwhile, Intel abandoned its previous 2024 forecast of selling over $500 million worth of its Gaudi AI processors, signaling continued difficulties competing against Nvidia’s dominant AI chips.
Market Overview:- Intel reports Q4 revenue of $14.26 billion, beating estimates
- First-quarter revenue forecast of $11.7B–$12.7B misses expectations
- PC and server CPU market share loss to AMD expected to continue
- Intel struggles to gain ground in the AI chip market
- Heavy spending on chip manufacturing raises investor concerns
- Uncertainty looms as Intel searches for a permanent CEO
- Will Intel’s AI strategy be enough to challenge Nvidia?
- How will tariffs under Trump’s policies impact Intel’s supply chain?
- Can a new CEO reignite growth and restore investor confidence?
- Intel's Q4 revenue of $14.26 billion exceeded expectations, showcasing resilience in its core business despite challenges in the AI chip market.
- The company's focus on cost-effective AI chips like Gaudi 3 positions it to capture demand from businesses seeking affordable alternatives to Nvidia’s high-end GPUs, particularly for inference-based workloads.
- Intel’s ongoing investments in advanced manufacturing technologies, including the upcoming Intel 18A process, could enhance its competitiveness and improve margins in the long term.
- The appointment of a new CEO could bring fresh strategic direction, potentially revitalizing Intel’s efforts to regain market share in both the PC and data center segments.
- Intel’s diversified revenue streams, including its strong performance in the Network and Edge division (up 10% year-over-year), provide a buffer against weaknesses in other areas.
- Intel’s Q1 revenue guidance of $11.7–$12.7 billion fell short of Wall Street expectations, reflecting ongoing struggles with declining demand for traditional server CPUs and competitive pressures from AMD and Nvidia.
- The company’s failure to meet its $500 million revenue target for Gaudi AI chips underscores its inability to compete effectively in the lucrative AI chip market dominated by Nvidia.
- Market share losses to AMD in both the PC and server segments continue to weigh on Intel’s growth prospects, with analysts projecting further erosion in 2025.
- Heavy spending on manufacturing and R&D raises concerns about Intel’s ability to balance investments with profitability, particularly as it faces delays and execution risks in its foundry services business.
- Geopolitical risks, including potential tariffs under Trump administration policies, could disrupt Intel’s supply chain and further pressure margins in the near term.
Intel’s transformation remains in flux after the abrupt exit of CEO Pat Gelsinger, leaving interim leadership to navigate a delicate turnaround. Despite ongoing investments to become a contract chip manufacturer, investors remain wary of mounting costs and the company’s ability to regain market share from AMD (AMD) in both PC and server segments.
With the PC market showing only modest recovery and server processor demand under pressure, Intel’s near-term outlook remains cloudy. While revenue exceeded expectations in the fourth quarter, its struggle to break even in the coming months highlights the challenges ahead. Investors will be closely watching for signs of stabilization and a clear strategic direction under a new leadership team.
