Semiconductor investors who shunned Nvidia (NVDA), Arista Networks (ANET), ASML, and AMD (AMD) and bought Intel (INTC) paid a steep price. Shares fell by around 10% to close at $31.88 last Friday.
The company posted a decent profit of 18 cents a share (non-GAAP) as revenue increased by 8.5% Y/Y to $12.7 billion. However, Intel expects to lose 5 cents a share in the second quarter.
Shareholders are worried about the mixed Q1 performance. Client Computing revenue grew by 30% but Data Center and AI of $3 billion is a 19.4% Y/Y drop. Network and Edge and Mobileye revenue also fell.
The company is ramping up deliveries of chips that power AI systems. The inexpensive hardware will compete for customers at the budget and low end. Conversely, AMD has the MI300 solution, while Nvidia customers want the H100 and B200 AI servers.
Turnaround Lags
Holding the CEO position for three years, Intel has yet to show its fortunes are turning around. The business rebound depends on starting a foundry from the ground up. This competes with the dominant leader, Taiwan Semiconductor (TSM).
Bankruptcy is highly unlikely. The company has plenty of government subsidies and tax credits.
Your Takeaway
The return of the PC refresh will benefit Intel’s Client division. If it executes its AI and server roadmap, the stock could rebound toward the latter half of 2024.
