Intel Expects Revenue To Fall Due To Competition, Economic Uncertainty

While Intel says it beat Wall Street's expectations for fourth-quarter 2024 revenue by reporting a 7.7 percent sequential increase Thursday, the semiconductor giant warns that sales could plummet by as much as 18 percent in this year’s first quarter due to a few major factors, including economic uncertainty and competition from other companies.

Intel beat Wall Street’s expectations for fourth-quarter 2024 revenue by reporting a 7.7 percent sequential increase Thursday, but the semiconductor giant warned that sales could plummet by as much as 18 percent in this year’s first quarter due to a few major factors, including economic uncertainty and competition from other companies.

In its fourth-quarter revenue release, the Santa Clara, Calif.-based company said revenue for the period was $14.3 billion, down 7 percent year over year but higher than the previous quarter and slightly above Wall Street analysts’ high-end estimate, per Yahoo Finance.

Intel reported earnings per share (EPS) of 13 cents for the fourth quarter on a non-GAAP basis, which was down 76 percent from the same period last year but surpassed the average analyst estimate. On a GAAP basis, the company’s earnings per share were negative 3 cents, a 105 percent decline from the fourth quarter of 2023.

The company’s stock price was up more than 1.5 percent in after-hours trading.

Michelle Johnston Holthaus, who was named interim co-CEO and CEO of Intel Products after former CEO Pat Gelsinger’s sudden departure in December, called the fourth quarter a “positive step forward as we delivered revenue, gross margin and EPS above our guidance.”

“Our renewed focus on strengthening and simplifying our product portfolio, combined with continued progress on our process roadmap, is positioning us to better serve the needs of our customers,” she said in a statement, adding that she and Dave Zinsner, the other interim co-CEO, “are taking actions to enhance our competitive position and create shareholder value.”

Zinsner said the cost reduction plan Intel announced last August, which targeted more than $10 billion in cuts and over 15,000 job cuts, “is having an impact.”

“We are fostering a culture of efficiency across the business while driving toward greater returns on our invested capital and improved profitability,” he said in a statement.

In the face of positive developments, Intel said it faces challenges ahead, forecasting that revenue in the first quarter will decline to anywhere between $11.7 billion and $12.7 billion.

At the high end, this would mark an 11.1 percent sequential decrease, but it would be in line with the first quarter of last year. At the low end, the forecasted revenue would represent an 18 percent sequential decline and a 7.9 percent year-over-year decrease.

Zinsner blamed the first-quarter outlook on “seasonal weakness” that is being “magnified by macro uncertainties, further inventory digestion and competitive dynamics.”

“We will remain highly focused on execution to build on our progress and unlock value,” he added.

Across Intel’s main businesses, the Client Computing Group reported that revenue declined by 9 percent year over year to $8 billion while the Data Center and AI Group saw sales decrease by 3 percent to $3.4 billion. The Network and Edge Group, on the other hand, saw revenue grow by 10 percent to $1.6 billion.

Intel’s Main Businesses Actually Grew In 2024

Intel said it finished its 2024 fiscal year with $53.1 billion in revenue, which was down 2 percent from the previous year. Gross margin was 32.7 percent, down by 7.3 points from last year.

While the company’s two largest businesses—the Client Computing Group and the Data Center and AI Group—saw revenue decline in the fourth quarter, Intel reported that those divisions along with the Network and Edge Group all grew by single percentage points in 2024, with Client Computing Group up by 4 percent and the other two up by 1 percent each.

Intel Foundry, on the other hand, saw revenue decline by 7 percent to $17.5 billion in 2024 while its other businesses, including Altera, plummeted by 32 percent to $3.8 billion last year.