Intel released its December-quarter financial results on Thursday, exceeding analysts’ low expectations. However, the company’s forecast for the current quarter fell short of projections amid sluggish demand for its data center chips, and as stakeholders await the appointment of a new CEO.
Following the report, shares of the Santa Clara, California-based chipmaker saw a 3.8 percent increase in after-hours trading. This comes after a challenging year in which Intel’s stock experienced a downturn of approximately 60 percent.
The quarterly performance and outlook were largely overshadowed by uncertainties regarding Intel’s long-term strategy and the ongoing transition following the recent ousting of former CEO Pat Gelsinger. Currently, Intel is managed by two interim co-CEOs while the company seeks to regain its competitive edge, particularly against rivals like AI chip leader Nvidia.
Intel is navigating a pivotal transition period, attempting to recover from one of the most challenging times in its history while also striving to benefit from the surge in investment in advanced AI semiconductors.
During a conference call with investors, Co-interim CEO Michelle Johnston Holthaus announced that the company would be postponing its upcoming graphics processing unit (GPU) design, known as Falcon Shores. This decision leaves Intel with no significant new offerings for AI clients, with plans to utilize Falcon Shores as an internal test chip while concentrating on future AI products for data centers.
In its earnings report, Intel projected first-quarter revenues to range from $11.7 billion (approximately Rs. 1,01,359 crore) to $12.7 billion (around Rs. 1,10,010 crore), falling below analysts’ average estimate of $12.87 billion (approximately Rs. 1,11,498 crore) based on data from LSEG.
The demand for Intel’s traditional server processors has dwindled as companies focused on generative AI technology channel investments into specialized AI processors capable of handling massive data sets.
Interim co-CEO and Chief Financial Officer David Zinsner highlighted that the company’s slower demand outlook could be attributed to “normal seasonality” as well as potential tariffs from the Trump administration. He noted that the possibility of tariffs may have prompted customers to purchase more Intel chips ahead of the first quarter to avoid higher costs resulting from such measures.
Zinsner also indicated that Intel aims to keep its operating expenses around $17.5 billion (approximately Rs. 1,51,627 crore) by 2025.
Last year, Intel withdrew its forecast for 2024, which anticipated sales exceeding $500 million (roughly Rs. 4,331 crore) from its new AI processors, Gaudi, implying challenging competition against Nvidia’s offerings.
On an adjusted, per-share basis, Intel anticipated it would break even for the current quarter, while analysts had projected an adjusted profit of nine cents per share.
The company is investing significantly to position itself as a contract manufacturer of chips for other companies, raising concerns among some investors regarding potential pressures on its cash flow.
Holthaus mentioned in an interview that the search for a new CEO is progressing, and emphasized that until a selection is made, the current leadership is focused on executing necessary tasks.
Investors are eager for clarity regarding the future direction of the business that a new CEO might provide.
Michael Schulman, Chief Investment Officer at Running Point Capital, remarked that the lack of a new CEO announcement could foster uncertainty among investors, as stable leadership is critical for navigating the competitive landscape and implementing turnaround strategies.
For the fourth quarter, Intel reported a revenue drop of seven percent year-over-year, totaling $14.26 billion (approximately Rs. 1,23,552 crore), although it surpassed estimates of $13.81 billion (around Rs. 1,19,609 crore).
According to Zinsner, some of the revenue and profit margin success in the fourth quarter can be attributed to grants Intel received under the federal CHIPS Act.
The PC market, which remains the largest revenue source for Intel, saw only modest growth in global shipments last year, underperforming expectations for a strong rebound following previous declines.
Additionally, Intel has been losing market share in the PC and server CPU sectors to competitor AMD, a trend analysts foresee continuing into 2025.
© Thomson Reuters 2025
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