Will Soft Data Center Revenues Mar Intel (INTC) Q1 Earnings?
Intel Corporation INTC is scheduled to report first-quarter 2024 results on Apr 25 after the closing bell. In the to-be-reported quarter, the company is likely to have recorded lower revenues from the Datacenter and AI Group (DCAI) segment, owing to the challenging macroeconomic environment.
However, the introduction of Xeon next-gen processors, code-named Sierra Forest, and advancements in AI-accelerated high-performance computing might have acted as a tailwind.
Factors at Play
The DCAI segment seeks to develop leading data center products, including Intel Xeon servers and field programmable gate array products, while overseeing the overall artificial intelligence (AI) strategy.
During the first quarter, Intel demonstrated solid advancements in AI-accelerated high-performance computing (HPC). The company leveraged Intel Xeon Processors, Intel Gaudi 2 AI accelerators and Data Center GPU Max series to showcase its capability in supporting HPC and AI workloads.
Intel offered a preview of Xeon next-gen processors, code-named Sierra Forest, with up to 288 Efficient-cores and Infrastructure Power Manager software for 5G core. The new processors, scheduled to launch later this year on a mass scale, will enable network operators to increase performance per rack, virtual CPUs and performance per watt without making any significant changes to the application software. These are likely to have supported the DCAI segment’s top line.
In the first quarter, Intel collaborated with DigitalBridge Group, Inc. to launch an independent AI-based software firm. Dubbed Articul8 AI, Inc., the firm will offer enterprise customers a full-stack, vertically-optimized and secure generative AI (GenAI) software platform to help gain deeper insights and drive continuous improvement. This turnkey GenAI software platform delivers speed, security and cost-efficiency by keeping customer data, training and inference within the enterprise security perimeter. It offers customers the choice of cloud, on-premises or hybrid deployment.
Although the platform boasts Intel hardware architectures such as Xeon Scalable processors and Gaudi accelerators at the core, it will support a range of hybrid infrastructure alternatives. As more and more business enterprises aim to integrate GenAI capabilities into their workflows, Articul8 is likely to gain wider industry acceptance. This is likely to benefit Intel and the broader ecosystem of customers and partners. In addition, with continued industry investments, it is expected to accelerate its go-to-market strategy and scale its product offerings for the broader GenAI ecosystem.
However, uncertain business conditions and soft demand trends induced by macroeconomic challenges and rising geopolitical volatility might have hurt this segment’s top line.
Overall Expectations
The Zacks Consensus Estimate for Data Center and AI revenues is pegged at $3,305 million, indicating a decline from $3,718 million in the year-ago quarter. However, our estimate for revenues from this segment is pegged at $3,560 million, suggesting a fall year over year.
For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $12,909 million, which indicates an increase from the year-ago quarter’s reported figure of $11,715 million. The consensus estimate for adjusted earnings per share stands at 13 cents, suggesting solid improvement from a loss of 4 cents incurred in the prior year.
Earnings Whispers
Our proven model does not predict an earnings beat for Intel for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 13 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Zacks Rank: Intel has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Qualcomm Incorporated QCOM is set to release quarterly numbers on May 1. It has an Earnings ESP of +0.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +5.96% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 2.
The Earnings ESP for Corning Incorporated GLW is +0.40% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 30.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Intel Corporation (INTC) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Corning Incorporated (GLW) : Free Stock Analysis Report
Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report
