$Intel(INTC)$ is scheduled to report its quarterly earnings results for fiscal Q1 2025 after the market closes on Thursday, 24 April 2025. Analysts have generally lowered their expectations since Intel's initial guidance.
The consensus revenue is anticipated to come in around $12.32 billion (representing a roughly 3.2% decline year-over-year).
There have many different variation of the consensus EPS, which I would think the loss of $0.01 per share might be closer, this already represent a sharp 94.4% drop YoY from $0.18 in Q1 2024, although note that Q1 2024 GAAP EPS was actually -$0.06).
Segment Expectations (Consensus):
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Client Computing Group (CCG - PCs): ~$6.86 billion (down ~9% YoY).
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Data Center and AI (DCAI): ~$2.97 billion (down ~2% YoY).
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Network and Edge (NEX): ~$1.41 billion (up ~3.1% YoY).
Intel (INTC) Last Neutral Earnings Call Saw Share Price Decline By 5.40%
Intel had a neutral earnings call on 30 Jan 2025 which saw its share price decline by 5.40%.
The earnings call presented a mixed outlook. Intel beat its revenue and EPS guidance for Q4 2024 and made progress in its Intel Foundry Services. However, challenges remain in the AI data center market, competitive pressures are affecting margins, and significant financial losses in the foundry segment persist. The company is focusing on product innovation and partnerships to improve its market position.
Intel (INTC) Guidance To Focus On Execution And Operational Efficiency
In the fourth quarter of 2024, Intel exceeded its guidance for revenue, gross margin, and EPS. The company reported $14.3 billion in revenue, a 7% sequential increase, with non-GAAP gross margins reaching 42.1%, surpassing expectations by 260 basis points. This was driven by robust performance in Intel Products, which saw $13 billion in revenue, up 7% sequentially, with strong contributions from CCG, DCAI, and NEX segments. Intel Foundry also reported $4.5 billion in revenue, with an improved operating loss due to an enhanced EUV wafer mix, which grew from 1% in 2023 to over 5% in 2024. Looking ahead, Intel provided Q1 2025 guidance with revenue expectations ranging from $11.7 billion to $12.7 billion, a non-GAAP gross margin of approximately 36%, and break-even EPS.
The company continues to focus on improving execution and operational efficiency, with a target to achieve break-even operating income for Intel Foundry by the end of 2027.
Key Factors to Watch For Intel (INTC) Fiscal Q1 2025 Earnings
In the previous Q4 2024, Intel cited reasons including seasonal weakness, macroeconomic uncertainties, ongoing inventory adjustments by customers, and competitive dynamics for the weaker outlook.
Analysts have generally lowered their expectations since Intel's initial guidance. We might want to look at these factors that might affect Intel fiscal Q1 2025 earnings.
PC Market & Tariffs: There's speculation that Q1 results might see a temporary boost from "pull-forward" demand, where customers bought PC chips ahead of potential tariff implementations. While this could help Q1 numbers, analysts worry it masks underlying weakness and could lead to an inventory glut and weaker future quarters. Even with this potential boost, the core Client Computing Group is expected to show a YoY revenue decline.
Intel maintained a strong position in the AI PC CPU market, with plans to ship more than 100 million systems by the end of 2025.
Data Center and AI: Intel continues to face intense competition from Nvidia and AMD in this lucrative market. While Intel is promoting its "AI PCs," its progress in the high-end AI chip space, crucial for data centers, is under scrutiny.
Intel is not currently participating in the cloud-based AI data center market in a meaningful way and has tempered expectations on Falcon Shores, focusing instead on Jaguar Shores.
Foundry Business (Intel Foundry Services - IFS): This is a major part of Intel's turnaround strategy (IDM 2.0). While securing CHIPS Act funding is positive, the foundry business reported significant losses previously, and breakeven isn't expected before 2027. Progress and customer adoption are key. The recent sale of a majority stake in Altera (formerly Intel's Programmable Solutions Group) might provide cash but also raises questions about strategy.
Intel Foundry achieved key grant-related milestones, receiving $1.1 billion in Q4 and an additional $1.1 billion in January from the U.S. Department of Commerce, as part of a grant agreement up to $7.86 billion.
Intel is on track to launch Panther Lake, its lead product on Intel 18A, in the second half of 2025, with Nova Lake planned for 2026, promising better performance and margins.
Intel Foundry reported a $2.3 billion operating loss in Q4, with overall losses of more than $13 billion in 2024, and is targeting break-even operating income by the end of 2027.
Margins: Gross margins have been under pressure. Intel guided for 36% adjusted gross margin in Q1, below previous levels. Analysts expect margins might bottom out in Q1 but see limited expansion until later product cycles (like Panther Lake, expected H2 2025).
Intel delivered revenue, gross margin, and EPS above guidance for Q4 2024. Revenue was $14.3 billion, up 7% sequentially, which was at the high end of the range provided in October.
Non-GAAP gross margin for Q4 was 42.1%, with expectations for pressure in 2025 due to product mix and increased competition in client and data center segments.
Cost Cutting: Intel is undergoing significant restructuring, including headcount reductions (over 15%) and reduced spending, aiming for $10 billion in savings by 2025. Progress on this front will be monitored.
Guidance for Q1 2025 indicates a revenue decline between 11% to 18% sequentially, citing macro uncertainty, seasonality, and increased competition across all segments.
Intel (INTC) Price Target
Based on 32 Wall Street analysts offering 12 month price targets for Intel in the last 3 months. The average price target is $23.00 with a high forecast of $34.00 and a low forecast of $18.00. The average price target represents a 21.50% change from the last price of $18.93.
The overall analyst consensus rating is a "Hold". Zacks Investment Research gives Intel a Rank #4 (Sell), suggesting expected near-term underperformance.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at Intel share price, even though they have installed a new CEO, the market confidence remains weak, and we are not seeing investors sentiment pushing up the momentum as seen in the RSI.
The bears are in control and the downward trend can be seen over the past two weeks, I believe we might see further weakness if Intel losses in foundry is not reduced significantly, the competition in the AI space would be heating up with the tariffs in place.
So Intel margins depend on reducing losses in foundry and improving product mix. Intel’s IFS aims to compete with TSMC/Samsung. Progress in attracting external clients (e.g., Qualcomm, Amazon) and achieving yield/scale by 2025 will impact revenue diversification.
I would hold on to getting into Intel and see how the semiconductor space is progressing with the potential tariffs.
Summary
Expectations for Intel's Q1 2025 earnings are quite subdued. While the company beat estimates in Q4 2024, its own guidance for Q1 was weak.
Analyst forecasts generally point to year-over-year declines in both revenue and earnings per share. A potential short-term boost from tariff-related PC chip buying might occur, but underlying challenges in core markets like data center/AI and competitive pressures remain significant concerns.
I think as investors we might want to shift our focus to see whether Intel meets its lowered guidance, commentary on demand trends (especially post-Q1), progress in AI and Foundry, and updates on cost-saving measures when they report on 24 April.
Appreciate if you could share your thoughts in the comment section whether you think Intel would be able to give a much better guidance on cost-saving measures, especially losses cutting on its Foundry.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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