Intel's Q1 Outlook Falls Short of Expectations... Shares Plunge 12% After Hours

Supply Shortage Concerns
Some Point Out "Overvalued Compared to TSMC"

Shares of U.S. semiconductor company Intel plunged 12% in after-hours trading after the company presented a first-quarter revenue outlook that fell short of market expectations.

Reuters Yonhap News

On January 22 (local time), Intel announced that its revenue for the fourth quarter of last year was $13.7 billion, a 4% decrease compared to the same period the previous year. This figure slightly exceeded the market forecast of $13.4 billion compiled by market research firm LSEG. Adjusted earnings per share (EPS) came in at $0.15, beating the market estimate of $0.08.

By business segment, quarterly revenue from the Data Center and Artificial Intelligence (AI) division rose 9% year-on-year to $4.7 billion. Revenue from the Client Computing segment fell 7% to $8.2 billion. Foundry (semiconductor contract manufacturing) revenue increased 1% year-on-year to $4.5 billion, but CNBC pointed out that a portion of this was related to the company's own chip production.

CEO Pat Gelsinger stated, "Confidence in the critical role that central processing units (CPUs) play in the AI era continues to grow," adding, "We ended the year on a strong note and made progress in our journey to build a new Intel." He emphasized, "Our priorities are clear," and, "We aim to fully leverage the vast opportunities that AI offers across all business areas."

However, the company's estimated first-quarter revenue fell short of market expectations. Intel's projected midpoint for first-quarter revenue is $12.2 billion, which is lower than Wall Street's consensus estimate of $12.51 billion. In addition, Chief Financial Officer David Zinsner indicated the possibility of supply shortages amid surging demand driven by the AI boom, stating, "We expect available supply to remain at its lowest level in the first quarter, with improvement anticipated from the second quarter onward."

U.S. IT media outlet The Information noted that Intel's stock price has more than doubled over the past five months and pointed out, "Intel's price-to-EBITDA multiple is higher than that of its competitor TSMC."

Intel's stock price rose 0.13% during regular trading on the New York Stock Exchange that day, but plunged about 12% in after-hours trading following the earnings announcement.