Intel shares will have to remain patient with several quarters to go before the chip company gains ground in an effort to make the company compete with Taiwan Semiconductor Manufacturing and Samsung in the chip manufacturing sector.
Other big bets, such as chips for PCs and artificial intelligence servers, are still at least a few quarters away from coming to fruition.
Meanwhile, Intel’s first-quarter earnings report, due after the close of trading on Thursday, could show signs of improving demand from the PC segment.
For the quarter, Intel’s expectations call for revenue of $12.2 billion to $13.2 billion, with an adjusted gross margin of 44.5% and adjusted earnings of 13 cents per share. The consensus Street estimates, as tracked by FactSet, call for revenue of $12.8 billion, up 10% from a year ago, with earnings of 14 cents per share on an adjusted basis.
For the June quarter, the Street consensus calls for revenue of $13.7 billion and adjusted earnings of 26 cents per share.
Citi analyst Christopher Danely, while maintaining a neutral rating on Intel stock, recently launched an “upside catalyst watch” on the stock, which is down 32% year to date, largely due to recent revelations of bigger-than-expected losses on the company’s shares. foundry company.
But Danely notes that notebook sales in the March quarter rose 44% from February, offering a potential upside over consensus estimates for the quarter. Danley points out that about 31% of Intel’s revenue comes from notebook processors.
BofA Global Research analyst Vivek Arya, who remains neutral on the stock, thinks Intel will get a boost from a refresh cycle in PCs in the near term, helped by Microsoft’s upcoming end of support for Windows 10, which should drive demand from business buyers. But he remains concerned that AI computing budgets are crowding out the purchase of more conventional servers.
Susquehanna Financial Group analyst Christopher Rolland, who also rates Intel stock at Neutral, agrees that demand from the PC business should be “OK,” and he thinks the company has been gaining market share in both laptops and desktops , but he notes that server shipments may be weaker ahead of new product launches in the second half.
