Intel Earnings Beat Guidance Ahead Of 18A Volume Chip Production

Intel sign outside of its Santa Clara headquarters.
Intel posted its first earnings report since Pat Gelsinger retired from his post as Chief Executive Officer, and it largely shows the continued efforts of a major restructuring strategy that began before he left. For example, fourth quarter revenue declined 7% year-over-year to $14.3 billion, while the full year tally was down 2% to $53.1 billion.

It's the third straight quarter of revenue declines, and this time it resulted in a $128 million loss for the quarter. For the full year, Intel posted a net loss of $18.8 billion. Yikes, right? Perhaps, but only if ignoring the bigger picture.

Intel is the midst of righting a ship that's been in turbulent waters for a long while now. Before Gelsinger left, he implemented a whole bunch of cost-cutting measures (including layoffs, sadly), as well as numerous chip fab investments that should pay off over time. Additionally, Intel's latest quarter actually came above previous guidance.

"The fourth quarter was a positive step forward as we delivered revenue, gross margin and EPS above our guidance," said Michelle Johnston Holthaus, interim co-CEO of Intel and CEO of Intel Products. "Our renewed focus on strengthening and simplifying our product portfolio, combined with continued progress on our process roadmap, is positioning us to better serve the needs of our customers. Dave and I are taking actions to enhance our competitive position and create shareholder value."

Slide of Intel revenue by division.

On a year-over-year basis for the quarter, Intel posted losses in both its Client Computing Group (CCG) and Data Center and AI (DCAI) division, with the former dropping 9% to $8 billion and the latter declining a more modest 3% to $3.4 billion. However, they each saw quarter gains, with CCG going from $7.33 billion to a tick over $8 billion, and DCAI inching upward from $3.35 billion to $3.39 billion. Additionally, full-year figures are up for both divisions, at $30.3 billion (up 4%) and $12.8 billion (up 1%), respectively.

Looking at Intel's CCG efforts, the company claims to lead the AI PC category and says it is on track to ship more than 100 million AI PCs by the end of this year. Meanwhile, Intel is in the process of installing tools at its Fab 52 site in Arizona as it gets ready to ramp production of 18A chips.

David Zisner, the other interim co-CEO and also Chief Financial Officer at Intel, offered more context. He said Intel's execution of 18A has "been an area of good progress," and called it a "very competitive offering" that should have a big impact on Intel's bottom line.

"The financial benefits of shifting our wafer volume from Intel 7 to Intel 18A along with learning to run our fabs more efficiently and our process nodes longer will be important drivers of improving our financials," Zisner stating during an earnings call.

It will be interesting to see how investors respond, especially as all this comes with the caveat of a softened outlook for the first quarter of 2025. While Intel posted better-than-expected results for Q4 2024, the company said it expects to break even in the first quarter of this year, which is short of the market was anticipating.

Zinsner offered some context in this regard, attributing seasonal weakness, macro uncertainty (tariffs, basically), and other factors to the near-term outlook.

"The cost reduction plan we announced last year to improve the trajectory of the company is having an impact," Zinsner said. "We are fostering a culture of efficiency across the business while driving toward greater returns on our invested capital and improved profitability. Our Q1 outlook reflects seasonal weakness magnified by macro uncertainties, further inventory digestion and competitive dynamics. We will remain highly focused on execution to build on our progress and unlock value."

What all this means is that Intel still has a lot of hard to do in order to fully right the ship, but its latest earnings suggest it's no longer dumping buckets of water overboard as it sails in circles.