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Intel’s Earnings Report: What to Expect?

 

Intel $INTC is set to report fourth-quarter Earnings on January 24. So far, the company’s earnings have beat  Zacks Consensus Estimate in the last four quarters, by an average of 18.7%. Just as an example, in the last reported quarter, Intel revealed results of $1.40 per share on revenue of $19.163 billion, instead of an estimated $ 1.15 per share on revenue of $18.115 billion, which is 18.7% year over year and 13% quarter over quarter. The year-over-year improvement can be explained by both data-centric and PC-centric businesses growth.

The coming earnings report will have an influence on the $INTC valuation and either move it higher if these key numbers are going to be better than expected, or if they miss, drag the stock down. The expectations for the world’s largest chipmaker are an EPS of $ 1.22 on revenue of $19.01 billion. Those numbers represent year-over-year growth of 13% for EPS and 11.5% for revenues. The stock currently carries a “Hold” rating by Zacks.

Intel’s focus on data center, cloud, self-driving car, artificial intelligence (AI) and Internet of Things (IoT) are key growth drivers for the fourth quarter. So let’s take a look on factors that might have an impact on the company’s results:

  1. The chipmaker launched the much awaited Xeon Scalable CPUs on 10nm Ice Lake architecture featuring robust AI and memory capabilities. Notably, it has been selected by Alibaba (BABA) already. The robust adoption of the company’s CPU and GPU processors are expected to bolster Data Center Group or DCG revenues.
  2. The company introduced new 9th Gen Intel Core processors in the quarter under review. Intel also showcased latest hybrid CPU architecture client platform, dubbed as “Lakefield” by the company. It’s quite possible that the new CPUs will expand the company’s customer base.
  3. Intel presented Project Athena, by which the company aims to enable advanced laptops to utilize robust technologies including 5G and AI.
  4. Intel revealed that it is working on an AI-based inference chip, NNP-I (Nervana Neural Network Processor for Inference). The chip is aimed at assisting companies having higher workloads with accelerated inference. Notably, Facebook is one of the development partners in the project.

All the above-mentioned factors are likely to impact the company’s fourth-quarter results. Further, the greater number of threads and cores in the recently introduced Intel Core i9-9900K gaming processor is anticipated to aid the semiconductor giant to improve its competitive position against peers like Advanced Micro Devices AMD.

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