Key Points:
- Intel investors are closely watching how the company handles supply chain issues that limit chip production.
- The company expects first-quarter revenue to decline by 1.9% to roughly $12.42 billion.
- Intel’s data center and artificial intelligence segment should grow 6.8% to $4.41 billion.
- Investors want updates on the manufacturing yield rate for Intel’s new 18A silicon wafer process.
Investors are keeping a very close eye on Intel this week. When the massive tech company reports its earnings on Thursday, Wall Street will focus heavily on how executives plan to sort out severe supply chain issues. These ongoing problems seriously limit the company’s ability to ramp up essential chip production right when global demand is exploding. Businesses around the world desperately need more computer chips as they aggressively adopt new artificial intelligence services.
Intel recently issued a stark warning regarding its manufacturing capabilities. The company cautioned investors that supply constraints on its highly sought-after server chips will be extremely acute throughout the first quarter. These specific server chips are vital because tech companies usually pair them directly alongside the massive graphics processors made by industry giant Nvidia. Intel executives hope the messy supply chain situation will finally start easing when the second quarter begins.
The upcoming financial report will likely show a mixed bag of results. According to data carefully compiled by LSEG, financial analysts expect Intel to report a slight 1.9% overall decline in first-quarter revenue, dropping the total to roughly $12.42 billion. More concerning for shareholders, the experts predict a massive, near-90 % drop in adjusted earnings per share compared to the same time last year.
Despite the overall revenue drop, one specific part of the business shows incredible promise. Analysts expect Intel’s dedicated data center and artificial intelligence segment actually to grow by 6.8% during the quarter. This specific growth should push the segment’s total revenue up to a very solid $4.41 billion. This jump proves that even with supply chain headaches, the massive demand for AI hardware continues to generate serious cash for the chipmaker.
Intel is actively making massive deals to secure its future in the artificial intelligence space. Earlier this month, the tech giant officially expanded its highly lucrative AI central processing unit partnership with Google. Furthermore, Intel made headlines when it officially joined Elon Musk’s massive new Terafab AI chip complex project. Intel will help make the complex processors needed to power Musk’s massive new technological ambitions in Texas.
Jacob Bourne, an analyst at eMarketer, explained why these massive corporate deals matter so much. He noted that the rapidly rising demand for specific CPUs used in massive AI data centers gives Intel a much steadier, more reliable revenue lifeline. This new stream of money makes the massive company far less dependent on the unpredictable and often frustrating consumer personal computer cycle.
Beyond the raw financial numbers, technical investors will pay very close attention to manufacturing yields. In the semiconductor industry, yield refers to the number of good, working computer chips a company can successfully produce on a single silicon wafer. Specifically, investors want a detailed update on the highly anticipated 18A manufacturing process. If the 18A process produces too many defective chips, it will severely hurt the company’s profit margins.
Ryuta Makino, an analyst at Gabelli Funds, which currently invests heavily in Intel, outlined exactly what the market expects to see. He stated that if Intel wants to make a truly outsized bid to win back Wall Street’s full confidence, the company’s 18A yield improvement must be significantly better than current market expectations. If Intel can prove it has fixed its manufacturing problems, the stock could see a massive surge following Thursday’s report.
