Intel to Report Earnings with Focus on Foundry Performance
Intel is set to release its earnings tomorrow, April 25, with a particular emphasis on the performance of its foundry business. This is the first time the company will report the financials of its foundry and design businesses separately.
Analysts’ Expectations
Analysts have modest expectations for Intel’s upcoming earnings release. They predict:
* Revenue: $12.78 billion (9.2% growth)
* Adjusted EPS: $0.14 (improvement from negative in previous quarter)
* GAAP EPS: $-0.15 (77% improvement from negative)
Key Concerns
Despite the overall expectation of improved financial performance, Intel faces several challenges, including:
* Competition with its own clients, such as AMD, who may hesitate to provide sensitive technical information to a potential competitor in the form of engineering blueprints.
* Loss of market share in gaming chips to NVIDIA and AMD.
Foundry Revenue Growth
Intel’s foundry revenue growth has been strong, but analysts expect it to decelerate. This is partly due to competition with companies like TSMC, which has a strong track record of growth in the sector.
Valuation Concerns
Despite Intel’s positive growth prospects, its valuation remains a concern. At current prices, Intel trades at a premium compared to its peers, such as TSMC. This makes it less attractive to investors seeking growth at a reasonable price.
Analyst’s Recommendation
Based on these factors, the analyst recommends holding Intel stock ahead of earnings. While the company may beat revenue estimates, it is expected to miss on earnings. The analyst highlights the D valuation rating and D- growth rating as reasons for caution.
Conclusion
Intel’s earnings report will be closely watched by investors, with a focus on the performance of its foundry business. While analysts expect modest growth overall, they have concerns about deceleration in foundry growth and Intel’s relatively high valuation. Investors should proceed with caution before making any investment decisions based on the upcoming earnings report.
