- PCs chips champion set to rally 8% after blowout Q3
- Dogged by fresh competition reports this week
- CEO trying to push Intel into new growth areas
Intel (INTC:NASDAQ) has been dogged all week by a Reuters report spelling out how the likes of ARM (ARM:NASDAQ), Nvidia (NVDA:NASDAQ) and Qualcomm (QCOM:NASDAQ) are coming to eat its chips – CPU microchips, that is.
But in the wake of third quarter results, not only has carnage been averted but earnings trounced forecasts, smashing the $0.22 consensus earnings per share with $0.41. Revenues for the three months to 30 September also beat expectations, the $14.2 billion unveiled more than 5% better than $13.5 billion projections.
| Intel beat revenue and smashed earnings forecasts in Q3 |
| Three months to 30 Sep | Reported | Forecast |
| Revenue (bn) | $14.2 | $13.5 |
| Earnings per share | $0.41 | $0.22 |
| Source: Investing.com |
Pre-market data has Intel stock jumping 8% when Wall Street reopens later today to near-2023 highs of $35.08, although barely half their level of 30-months ago.
CHANGING THE NARRATIVE
The post-pandemic slump in the global demand for PCs has been dominating the mood around Intel recently. IDC estimates that global PC shipments in the third quarter of 2023 declined by around 7.6% on an annual basis to 68.2 million units and even if the market researcher is right about recovery, its 2027 estimate of 285 shipments would still be far below 365 million peaks of a decade or so ago.
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Intel has been lagging behind its competitors in data centres, where AI-driven demand for GPUs (graphics processing units) is off the charts. It does not help that the chipmaker is predominant in the CPU (central processing units) sphere, which is somewhat of a non-starter when it comes to handling AI-related workloads.
Chief executive Pat Gelsinger wants to put this right and is positioning Intel towards chip architectures of the future, but this will take time, money, and a fair bit of patience from investors, illustrated by revenue forecasts that predict revenue below 2022’s $63 billion until 2025, according to Koyfin consensus.
This will make delivering the already expected vast improvement in profits on 2022 a tough challenge.
