Intel (INTC.US) shares rose more than 6% after a strong quarterly report, pointing to a possible turnaround for the company, which has struggled with declining sales ( PC ) and intense competition in the data center market.
The company’s unexpected second-quarter earnings and robust profit and margin forecasts indicated that the PC market slump may be nearing its end. This positive forecast triggered a jump in Intel’s share price and boosted the chip sector overall.
Financial highlights
• Revenue: $12.9 billion, which is down 15% year over year (YoY).
• EPS non-GAAP: $0.13, versus $-0.3$ expected
• The company is forecasting Q3 2023 revenue of approximately $12.9 billion to $13.9 billion.
• Expecting Q3 2023 non-GAAP EPS attributable to Intel of $0.20.
• Gross Margin was down 0.7% points from 36.5% in Q2 2022 to 35.8% in Q2 2023.
• Business Unit Revenue and Trends Q2 2023 vs. Q2 2022:
• Client Computing Group (CCG): $6.8 billion, down 12%
• Data Center and AI (DCAI): $4.0 billion, down 15%
• Network and Edge (NEX): $1.4 billion, down 38%
• Mobileye: $454 million, down 1%
• Intel Foundry Services (IFS): $232 million, up 307%
Intel’s CEO, Pat Gelsinger comments:
• AI Opportunity: In Q2, Intel began to see real benefits from their accelerating AI opportunity. They believe they are in a unique position to drive the best possible TCO (total cost of ownership) for their customers at every node on the AI continuum.
• Investments in Manufacturing Capacity: Intel is strategically investing in manufacturing capacity to further advance their IDM 2.0
AI and Semiconductor Sectors: Intel sees the surging demand for AI products and services as expanding the pipeline of business engagements for their accelerator products
• Quantum Computing: Intel shipped their test chip “Tunnel Falls” a 12-qubit, silicon-based quantum chip which uniquely leverages decades of transistor design and manufacturing investments and expertise
Although Intel was a leading player in the U.S. chip industry, it had fallen behind competitors such as Taiwan’s TMSC and Nvidia in both profit margins and market value.
The downturn in the PC market and fierce competition in the data center market had taken a toll on the company’s business. Intel’s shares are up 30% this year after a difficult 2022, but that increase pales in comparison to the more than threefold rise of Nvidia, which in May became the first chipmaker with a market value of $1 trillion.
The artificial intelligence market, which Intel has missed due to its small presence in GPUs and other French fries specializing in artificial intelligence, has largely enabled this monumental rise.
Intel (INTC.US), D1 interval, Source xStation 5
