Intel Surges as PC Sales Rebound: Chipmaker Intel is back on track with a positive fourth-quarter projection, and investors love it. The Santa Clara tech company’s third-quarter results beat expectations, sending its shares up 8% after the close.
Why is this trend positive? Intel is benefiting from PC sales recovery. In the third quarter, the global PC market fell 7%, compared to double-digit drops earlier this year. With the holidays approaching, researchers expect PC market growth to resume.
Additionally, Intel’s server chip business is stabilizing, and that’s boosting their gross margins faster than initially projected. While company executives had cautioned that it might take a while for margins to improve significantly, it’s happening sooner than expected. The adjusted gross margin for the third quarter came in at 45.8%, outperforming estimates of 42.7%. Intel’s turnaround efforts, spearheaded by CEO Pat Gelsinger, appear to be paying off.
Notably, Intel has also secured contracts with three customers for its chip contract manufacturing business, and Gelsinger is optimistic about closing a deal with a fourth customer before the year ends. This is a crucial move for the company as it diversifies its revenue streams and offers manufacturing services to other tech players.
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Gelsinger shared insights into Intel’s advanced manufacturing process called “18A,” set to commence production in late 2024. With three customers already on board and one significant pre-paid customer, Intel is forging ahead in this competitive space.
During a conference call with analysts, Gelsinger revealed that Intel is in discussions with six new customers for its advanced packaging business, signaling that the company is gaining ground in the semiconductor industry. As Gelsinger put it, “We have engagements with essentially the who’s who of foundry customers.”
Despite the intensifying competition from the likes of Nvidia in the data center chip market and potential entrants like Arm-based chips, Gelsinger downplayed the significance, emphasizing that they don’t see these competitors as major threats.
Intel reported adjusted profits of 41 cents per share for the third quarter, exceeding estimates of 22 cents. While revenue fell 8% to $14.2 billion, the company’s future outlook appears promising, thanks to its growing customer base, stabilizing margins, and surging interest in its AI chips.
Intel is proving its resilience in the ever-evolving tech landscape, and investors are taking notice. With an upbeat earnings report and an optimistic CEO, the chip giant is poised for a brighter future.
Our Reader’s Queries
Will Intel ever rebound?
In Q3 2023, Intel experienced a significant increase in sales related to PCs, which is a positive sign for the company. However, the stock market has already factored in a substantial recovery for Intel in 2024. Despite this, Intel’s free cash flow has been in a deficit and may continue to be for the foreseeable future.
Why did Intel stock fall so much?
The semiconductor company faced a setback due to the stock market’s initial decline this year. Additionally, a Wall Street analyst’s comments further worsened the situation. Although the analyst raised the price target, they did not consider Intel to be among the few “attractive” chip stocks.
Is Intel going to turn around?
Intel’s future is looking bright as the company’s fourth quarter guidance for 2023 indicates a potential turnaround. With a projected revenue of $15.1 billion, Intel management expects an 8% increase from the previous year. This positive outlook suggests a promising shift in the company’s fortunes.
What is Intel’s revenue forecast?
The company has predicted that its adjusted current-quarter revenue will fall between $14.6 billion to $15.6 billion. This forecast exceeds the estimated revenue of $14.35 billion, as reported by LSEG data.