by Arsheeya Bajwa and Max A. Cherney
(Reuters) – Intel said on Thursday it expects first-quarter revenue to be more than $2 billion below market expectations, amid uncertain demand for its chips for traditional servers and computers.
In post-closing stock trading, the stock of the Santa Clara, California-based firm plunged around 6%.
Intel said it expected revenue of between $12.2 billion and $13.2 billion for the January-March period, while the consensus was for $14.5 billion according to LSEG data.
The semiconductor maker expects quarterly earnings of 13 cents per share, compared with analysts’ average estimate of 33 cents per share.
Intel saw its gross margin being drowned out by the heavy investments made for its recovery. While it exceeded 60% in 2020, the group’s gross margin plunged to around 30% in the first half of 2023.
However, Intel’s gross margin has since rebounded, standing at 48.8% in the fourth quarter after 45.8% in the previous quarter.
In the eyes of analysts, Intel will play for its survival this year, estimating that 2024 will determine whether or not the Santa Clara firm will benefit from the deployment of artificial intelligence (AI) which has caused a surge in demand for dedicated computers and semiconductors.
For now, the shift towards data centers dedicated to AI to the detriment of traditional data centers has benefited Intel’s rivals, first and foremost Nvidia. Intel’s data center division saw its revenue decline 10% to $4 billion in the fourth quarter.
(Reporting Arsheeya Bajwa in Bangalore and Max A. Cherney in San Francisco, with Stephen Nellis in San Francisco; French version Jean Terzian)
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