Intel Corporation, one of the world's leading manufacturers of computer processors, has reported its fourth-quarter earnings for the fiscal year 2024, showing results above analyst expectations but coupled with disappointing forward guidance for the upcoming quarter.
For the quarter ending December 31, 2024, Intel posted revenues of $14.26 billion, representing a decline of 7.4% compared to the same period last year. Despite this year-on-year drop, the results slightly surpassed the market’s expectations, as analysts had predicted revenues of around $13.8 billion. This resilient performance at the top line, characterized as outperforming, was yet overshadowed by the company’s weak outlook for the first quarter of 2025, which has raised concerns among investors.
Intel’s guidance for Q1 CY2025 predicts revenues of approximately $12.2 billion, falling short of the consensus estimate of $12.9 billion—a difference of 5.4%. The company also expects to report non-GAAP earnings per share (EPS) at the midpoint of $0.00, beneath the analysts' average projection of $0.09 per share. This foreboding outlook has likely contributed to market jitters as the company continues to navigate through tough headwinds.
The disappointing guidance prompted Intel's management to explain their position during the earnings call. "The fourth quarter was a positive step forward as we delivered revenue, gross margin and EPS above our guidance," said Michelle Johnston Holthaus, the interim co-CEO. She emphasized the renewed focus on strengthening Intel's product portfolio as part of their strategy to meet customer demands more effectively.
Intel's client computing revenue, its largest segment, saw revenue decline by 9% to $8 billion, reflecting the broader trend of decreasing demand for personal computing products. The company's data center and artificial intelligence (AI) sales also saw modest declines of 3%. Even more challenging was the performance of Intel's foundry business, which reported a 13% drop, indicating the continuing pressure the semiconductor industry is experiencing amid global economic uncertainty.
Analysts point out several factors contributing to Intel's cautious outlook moving forward. The company attributed its weak guidance for Q1 2025 to seasonal weakness, macroeconomic uncertainties, and extensive inventory corrections, all set against fierce competitive pressures. This combination has left many investors wondering how Intel plans to innovate and regain market share against rivals, particularly as tech sectors evolve rapidly.
Despite the usual anticipation of growth entering the new fiscal year, Intel's situation reflects industry-wide challenges faced by semiconductor companies. With its market capitalization noted at $85.18 billion, Intel’s free cash flow resulted at -$1.5 billion, slightly worse than the previous year’s results and indicative of broader operational challenges.
Market reaction to the earnings report was mixed. Following the announcement, Intel's stock rose by 3.5% during after-hours trading, closing at $20.01 after initially reflecting concerns over the disappointing guidance. Conversely, the stock of one of Intel's main competitors, Apple Inc., dropped 0.7%, highlighting the varying pressures tech companies face during this earnings season.
Looking at the broader market, many analysts express skepticism about immediate recovery prospects for the semiconductor sector. Amid discussions of inventory corrections and shifts in consumer demand, Intel's future rests significantly on upcoming product releases and the strategic direction provided by its incoming CEO, whose identity remains unknown after the retirement of Pat Gelsinger.
Analysts have expressed concern over the company's recurring struggles over the past years, with Intel's long-term growth appearing to trend downward, raising questions about its ability to compete effectively with the likes of AMD and NVIDIA. Nevertheless, Johnston Holthaus and her fellow interim co-CEO David Zinsner continue to push for restructuring efforts, with hope for revitalized performance as the industry heads toward 2025.
The next quarter will be telling for Intel, and many on Wall Street will be closely monitoring their strategic decisions moving forward. The tech giant must adapt swiftly and decisively to remain relevant and regain its position within the competitive semiconductor industry, particularly as global demand for next-generation technologies continues to rise.