After years of pain for Intel Corp. investors, the company’s business finally seems to be coming off a bottom, but earnings will show if the company is again poised to be left behind as the artificial-intelligence era takes hold.
On the company’s last earnings call, Intel Chief Executive Pat Gelsinger pointed to an improving data-center business, but in light of the chip giant’s steep quarterly loss and years-long string of disappointments, analysts weren’t sure how much stock to place in that estimate. In other words, there’s risk that big cloud customers could be putting more of their budgets toward products that help with AI training, and Intel isn’t nearly as well positioned for this trend as Nvidia and AMD, both of which released new AI products this past year.
Susquehanna Financial analyst Christopher Rolland, with a neutral rating and $35 price target, expects Intel “to post a modest beat and raise,” but said “the longer-term sustainability of this momentum has yet to be determined.” Intel also isn’t offering much hope in terms of gross margin relief. “[A]s it looks to make up ground with new node ramps and invests heavily in its foundry strategy, [gross margins] are likely to be compressed for the foreseeable future,” Mizuho’s Rakesh added.