Intel reported December-quarter results on Thursday that exceeded analysts’ low expectations, while its revenue forecast for the current quarter fell short as the company faces weak demand for its data center chips and awaits a new CEO’s appointment.
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The chipmaker, headquartered in Santa Clara, California, witnessed its shares increase by 3.8% in after-hours trading. However, Intel’s shares suffered a significant decline of about 60% last year.
Intel’s quarterly performance and future outlook were clouded by uncertainty surrounding its long-term strategy and the search for a successor to former CEO Pat Gelsinger, who was ousted last month. Currently, the company is being led by two interim co-CEOs, Michelle Johnston Holthaus and David Zinsner, as it seeks to regain its competitive edge, notably against rivals such as Nvidia in the AI chip sector.
During a conference call, Holthaus announced that Intel would postpone its upcoming graphics processing unit (GPU) design, Falcon Shores, repurposing it as an internal test chip instead of releasing it for sale. This decision means Intel currently lacks new products tailored for AI customers, shifting its focus toward future data center AI offerings.
In its earnings report, Intel projected first-quarter revenue between $11.7 billion and $12.7 billion, below the analysts’ average forecast of $12.87 billion based on data compiled by LSEG.
The chipmaker’s weaker demand outlook reflects “normal seasonality” and the potential imposition of tariffs from the previous presidential administration, Zinsner stated during an interview. He noted that the impending tariffs might have incentivized clients to purchase more chips in advance to avoid higher costs should the tariffs be enacted.
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Intel aimed to keep operating expenses around $17.5 billion for 2025. Last year, it abandoned a forecast indicating over $500 million in sales of its new AI processors, named Gaudi, due to their poor competitive performance against Nvidia’s products.
On an adjusted per-share basis, Intel forecasted breakeven financial results for the ongoing quarter, while analysts anticipated a profit of 9 cents per share adjusted for various expenses.
Intel is heavily investing to expand into contract manufacturing for other companies, a move that has raised concerns among investors regarding potential cash flow pressures.
Holthaus confirmed that the board search for a new CEO is progressing, and emphasized their focus on executing necessary strategies until a new leader is appointed. Investors seek clarity on the company’s future direction, which a new CEO could provide.
Michael Schulman, Chief Investment Officer at Running Point Capital, remarked that the delay in appointing a new CEO could heighten investor uncertainty, as stable leadership is vital for navigating the current competitive environment and executing turnaround strategies.
Intel’s fourth-quarter revenue declined 7% year-over-year, totaling $14.26 billion, yet surpassing analysts’ expectations of $13.81 billion. The company reported a net loss of $126 million, or 3 cents per share, compared to a net income of $2.67 billion, or 63 cents per share, from the same quarter the previous year.
This marked Intel’s first earnings announcement since the departure of Gelsinger, who faced numerous challenges during his tenure, including losing market share and falling behind in the AI race while committing substantial investments in manufacturing plants.
During the fiscal fourth quarter, Intel’s Client Computing Group generated $8.02 billion in revenue, down 9% year-over-year but outperforming the $7.84 billion consensus projection by analysts. The Data Center and Artificial Intelligence segment contributed $3.39 billion, a 3% decrease, aligning with the $3.38 billion consensus, while the Network and Edge unit reported $1.62 billion in revenue, a 10% increase, above the anticipated $1.5 billion.
Intel finalized a $7.86 billion grant from the U.S. government to bolster manufacturing efforts in four states. The firm anticipates starting volume chip production using its 18A process technology in the second half of 2025 and plans to launch next-generation laptop chips under the codename Panther Lake within the same timeframe.
In a separate development, Intel is reportedly exploring a minority stake sale in Altera, its business known for field-programmable gate array chips, which it acquired for $14.5 billion in 2015. Zinsner indicated that the process regarding Altera is advancing, and he expects to provide updates in the next quarter’s earnings report.
Before Thursday’s trading session concluded, Intel shares had declined by 1% for the year, in contrast to a 3% increase in the S&P 500 index.
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Featured image credit: Intel
