Revenue and Forecast
Intel reported that its fourth-quarter revenue was $15.4 billion, up 10% from a year earlier. However, the stock price declined due to a lower-than-expected Q1 forecast. For the full year of 2023, Intel’s overall revenue was $54.2 billion, down 14% from the previous year.
Earnings and Projections
The fourth-quarter earnings per share (EPS) were reported to be 63 cents a share, with non-GAAP EPS at 54 cents a share. The full-year EPS was 40 cents a share, while non-GAAP EPS attributable to Intel was $1.05 a share. Intel is projecting first-quarter 2024 revenue of $12.2 billion to $13.2 billion, and first-quarter EPS attributable to Intel of 25 cents a share, with non-GAAP EPS attributable to Intel of 13 cents a share. Analysists were expecting 34 cents a share for Q1, which was lower than expected due to challenges in divisions such as Mobileye, according to Pat Gelsinger, CEO of Intel.
“2023 was a year where we did what we said we would do and more,” Gelsinger said. “We intend to make 2024 another such year.”
Gelsinger believes that the lower expectations are a temporary issue and he sees the fourth-quarter results as solid with revenue at the high end of guidance. Intel exited five businesses in 2023 and met its $3 billion cost savings target for the year.
“And when we look out over the next 12 months, we are confident that we can continue to drive considerable progress on our IBM 2.0 journey,” Gelsinger said.
Intel had expected Q4 revenues of $14.6 billion to $15.6 billion, with EPS of 23 cents a share and non-GAAP EPS of 44 cents a share. In after-hours trading, Intel’s stock is at $46.70 a share, down 5.83%. Intel’s market value is $208.9 billion.
“We delivered strong Q4 results, surpassing expectations for the fourth consecutive quarter with revenue at the higher end of our guidance,” said Gelsinger, in a statement.
Gelsinger also stated the focus on achieving process and product leadership, building the external foundry business, and bringing AI everywhere as the company’s long-term goals.
Organizational Changes and Segments
Intel announced an organizational change to integrate its Accelerated Computing Systems and Graphics Group into its Client Computing Group and Data Center and AI Group. The change aims to drive more effective go-to-market capability, accelerate the scale of these businesses, and reduce costs.
Intel’s segment reporting was modified to align with this change and other business reorganizations. In the fourth quarter, the Client Computing Group (CCG) saw revenue of $8.8 billion, up 33% from a year ago. The Data Center and AI (DCAI) group saw revenue of $4 billion, down 10% from a year ago. Network and Edge (NEX) reported revenue of $1.5 billion, down 24%. Mobileye revenue was $637 million, up 13%. Intel Foundry Services (IFS) reported revenue of $291 million, up 63%.
Foundry Strategy and AI Adoption
Intel stated that it is on track to hit its schedule for five manufacturing nodes in four years and regain transistor performance and power performance leadership by 2025. The company has offered its Intel 3 manufacturing tech to Intel Foundry Services customers and has made progress in building its foundry ecosystem.
“While our ambitions will not materialize overnight, we made tremendous progress in both Q4 and fiscal year 23 towards our goal of becoming the second largest external foundry by 2030,” Gelsinger said.
Gelsinger highlighted the rapid adoption of AI by all industries as a significant tailwind for Intel Foundry Services. He mentioned strategic agreements and collaborations across various sectors such as EDA design services, IP cloud, and the U.S. military, aerospace, and government. Intel also completed a major agreement with UMC to develop a 12-nanometer process platform targeting high-growth markets.
In the fourth quarter, Intel’s data center and AI division launched its 5th Gen Intel Xeon processor, optimized for AI workloads. Gelsinger emphasized the company’s mission to bring AI everywhere and the potential of the AI workload in the semiconductor market.
“We expect to ship approximately 40 million AI PCs in 2024 alone, with more than 230 designs from ultra-thin PCs to handheld gaming devices to be delivered this year from OEM partners,” Gelsinger said.
Intel’s focus on product innovation and new business ventures, as well as its improved product line, positions the company for growth in 2024. Gelsinger expects sequential and year-on-year growth in both revenue and EPS for each quarter of fiscal year 24.
“Momentum and excitement around new products and businesses remains strong,” Gelsinger said.
In 2023, Intel generated $11.5 billion in cash from operations and paid dividends of $3.1 billion.
