Intel's budding status as an artificial-intelligence winner will be tested when the company reports earnings on Thursday.
While the company has struggled to gain ground in the market for AI accelerators, its central processing units for servers are seemingly in demand as AI systems become more complex. That could drive upbeat results for the latest quarter, Wedbush analyst Matt Bryson wrote recently.
"As AI moves from simple assistants to autonomous agents that plan and execute tasks, the requirement for general-purpose compute is accelerating," HSBC analyst Frank Lee added in an upgrade of Intel's stock earlier this week, referring to operations carried out by CPUs.
Optimism about Intel's CPU momentum - and potential signs of life in the company's manufacturing business - have recently made the stock a winner. Shares have increased 47% so far this year to rank third among S&P 500 gainers for 2026. They finished up 11.7% in Wednesday's session alone, and at $54.25 saw their highest close since Jan. 18, 2022, according to Dow Jones Market Data.
In light of that strong rally, the question is whether Intel's strength in server CPUs can make up for some issues elsewhere in the business. For instance, Wedbush's Bryson noted that Intel faces risks around rising memory costs, which could affect the company's margins and crimp demand for personal computers.
Intel's ongoing challenges were also highlighted by Bernstein analyst Stacy Rasgon, who said the company has lost market share in its server business. Another problem for Intel could be that customers are still choosing its older products over its newer offerings, he added, a trend that muddies the idea that the company is experiencing supply constraints in server CPUs.
He also mentioned worries about the personal-computer business. "While it feels like beating a dead horse we still believe CPUs have been over-shipping PCs for some time," Rasgon said in a Wednesday note, adding that this dynamic could come to a head this year if increasing memory prices hurt PC shipments.
Intel is expected to report adjusted earnings of 8 cents a share on revenue of $13.4 billion for the fourth quarter, according to FactSet.
The chip maker's client-computing group, which includes PCs, is expected to account for $8.4 billion in revenue, while its data-center and AI segment is projected to see $4.4 billion in revenue.
For the first quarter, Wall Street is looking for revenue of $12.5 billion.
Susquehanna analyst Christopher Rolland said he would be listening for a formal customer announcement for Intel's foundry following a positive reception of its Panther Lake processors launched earlier this month, as well as reports that the chip maker is seeing growing customer interest.
Panther Lake, which powers PCs, was also a debut of Intel's 18A process node that so far looks "highly performant," Seaport Research analyst Jay Goldberg said in an upgrade of the stock this week. The performance of 18A is crucial to Intel proving that it can be competitive on the manufacturing side as it seeks external customers. But Goldberg said the viability of its foundry remains to be seen until it launches its 14A node, and that likely won't come until 2028.
Rolland said that despite his doubts that Intel will show major gross-margin expansion on Thursday, he is "slightly more constructive" ahead of the report after what looks like a success for Panther Lake.
"In short, this modest upside may set Intel up for one of its best reports in a while," Rolland said, although he admitted it has "a low bar" to meet.
Paul Meeks, head of technology research at Freedom Capital Markets, said he doesn't expect a blowout performance from Intel, but he will be looking for the company to share details of a chip partner or major customer.
"The only thing I think could be a real fundamental surprise would be confirmation of Apple, or confirmation of other partners - not rumors, but actual partners - for their latest manufacturing technology," Meeks said in emailed comments.
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