Intel shares fall as chipmaker's forecast fails

Chipmaker shares Intel Corporation (you are K) fell sharply on Friday after the company badly missed estimates with its forecast for the current quarter. Intel stock fell more than 12% on the news.

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The Santa Clara, California-based company late Thursday reported adjusted earnings of 54 cents per share on sales of $15.41 billion in… December quarter. Analysts polled by FactSet had expected Intel earnings of 45 cents per share on sales of $15.16 billion. In the same period a year earlier, Intel earned 10 cents per share on sales of $14.04 billion.

Intel's fourth-quarter report marks a return to growth after eight straight quarters of declining profits and seven straight quarters of year-over-year sales declines.

However, for the first quarter, Intel expected adjusted earnings of just 13 cents per share on sales of $12.7 billion. Analysts were looking for earnings of 34 cents per share on sales of $14.24 billion for the March quarter. In the same quarter last year, Intel lost 4 cents per share on sales of $11.72 billion.

Worse still, under generally accepted accounting principles, Intel expects a loss of 25 cents per share in the first quarter.

Intel shares fell after the report

In afternoon trading on the stock market today, Intel stock fell 12.2% to 43.51.

Intel shares stumbled on sell signals on Friday when they fell below the 50-day moving average line, a key support level, on heavy trading volume.

On Nov. 15, Intel stock broke out of a nine-week consolidation pattern at a buy point of 40.07, according to IBD MarketSmith charts. It rose to a high of 51.28 on December 27 before falling.

At least seven Wall Street companies lowered their price targets for Intel shares after the earnings report. Two other companies downgraded Intel shares to hold from buy.

Meanwhile, two companies raised their price targets for Intel stock, but are neutral to negative on the stock.

A first quarter slippage is seen as a slippage

In a conference call with analysts, CFO David Zinsner blamed the lower first-quarter guidance on “material inventory corrections” in automotive and programmable chips. He also forecast a “slightly sub-seasonal” outlook for Intel's core business.

CEO Pat Gelsinger sees the disappointing first-quarter outlook as a blip.

“More importantly, we see this as temporary, and we expect sequential and year-over-year growth in both revenue and EPS (earnings per share) for each quarter of fiscal year (FY) 2024,” he said on the call.

Data center sales are weak

The revamped PC business led to better-than-expected results for Intel in the fourth quarter. The company's Customer Computing Group reported a 33% increase in revenue to $8.8 billion.

Intel's total revenue rose 10% year over year, as declines in data center and networking chips offset gains in PC chips.

Intel's data center and artificial intelligence unit saw sales decline 10% to $4 billion in the fourth quarter. The company's networking and edge businesses reported a 24% sales decline to $1.5 billion.

Early Thursday, Intel announced Foundry cooperation With the contract chip maker United Microelectronics (UMC). The two companies will collaborate on developing a 12nm semiconductor process platform to address high-growth markets in mature nodes. These markets include mobile telecommunications and networking infrastructure.

Last September, Intel announced an agreement With the contract chip maker Semiconductor tower (TSEM). Under this deal, Intel will provide foundry services and the capacity to manufacture 300mm wafers to help Tower serve its customers globally.

Chip stocks are moving

Other semiconductor stocks that responded to Thursday's earnings news included Intel Mobileye International (Wet) and European chip maker ST Microelectronics (STM). The two companies reported fourth-quarter results before the market opened on Thursday.

My mobile phone was delivered Fourth quarter numbers In line with its preliminary findings presented on January 4. However, its 2024 sales forecast of $1.9 billion fell short of estimates of $1.98 billion.

The maker of self-driving and driver-assistance technologies earned adjusted profit of 28 cents per share on sales of $637 million in the December quarter. On a yearly basis, Mobileye's profits rose 4% with sales increasing 13%.

STMicro posted better than expected Fourth quarter earnings On built-in sales approx. However, her directions were soft. The industrial and automotive chipmaker earned $1.14 a share on sales of $4.28 billion in the December quarter. On an annual basis, its profits fell by 14% while sales fell by 3%.

For the first quarter, STMicro forecast sales of $3.6 billion, exceeding the consensus target of $4.08 billion.

On Thursday, Mobileye shares rose 1.2% to 27.95, while STMicro shares fell 0.8% to 45.60.

Intel shares have a Average Composite Rating

Intel stock ranks fifth out of 32 stocks in IBD's semiconductor industry group, according to IBD inventory check. It has an average composite IBD rating of 78 out of 99.

STMicro ranks 10th in the chipmaker group with a Composite Rating of 63.

Meanwhile, Mobileye is ranked No. 17 in IBD's fabless semiconductor industry group. It has a composite rating of 62.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.

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