Intel Corporation reported its first-quarter earnings today, showcasing its commitment to leading the AI hardware market under its new financial structure.
The company achieved first-quarter revenue of $12.7 billion, reflecting a 9% year-over-year (YoY) increase. For the second quarter of 2024, Intel projects revenue between $12.5 billion and $13.5 billion.
Despite surpassing analysts’ expectations for Q1, Intel's Q2 outlook caused a stock drop of 8%, as it fell short of the anticipated $13.63 billion. The adjusted earnings per share (EPS) stood at $0.18 on revenues of $12.72 billion.
“We delivered solid Q1 results,” stated CEO Pat Gelsinger during the earnings call. He acknowledged that while the results were “moderately weaker than anticipated,” Intel expects Q1 to mark a low point, anticipating earnings growth throughout the year.
Gelsinger highlighted the company's expanding AI capabilities, particularly emphasizing the Gaudi 3 AI accelerator. It is designed to outperform competitors Nvidia and AMD, promising up to 50% faster inference and 40% greater efficiency on leading AI models. Furthermore, Intel is amplifying its focus on AI PCs.
“AI is a hot market; we’re participating across all of our segments,” Gelsinger declared. “We’re delivering AI everywhere.”
Product Segment Performance and Foundry Impact
Intel's recent restructuring groups revenues from client computing, data center, AI, and network and edge divisions into “Intel Products.” The Intel Foundry semiconductor business now reports separately, while the semiconductor business Altera, software segment Mobileye, and other functions fall into a new “All Other” category.
Intel Products generated $11.9 billion, a 17% YoY growth, with client computing rising by 31% to $7.5 billion. Data center and AI products reached $3 billion (up 5% YoY), while the network and edge segment grew to $1.4 billion (an 8% increase). In stark contrast, “Other” revenue plummeted by 46% YoY to $775 million, and Intel Foundry reported $4.4 billion, down 10% YoY.
However, Gelsinger projected an upward trend for Intel Foundry, stating, “Every quarter from here until the decade ends, we’ll see improvement.”
“We are encouraged by our progress,” he added, “but far from satisfied.”
Rising AI PC Market
Intel is aggressively advancing its AI PC offerings, having launched the Intel Core Ultra processors in December 2023. By the end of Q1, the company shipped over 5 million AI PCs, expected to exceed the previous forecast of 40 million AI PCs by the end of 2024.
“We are defining and leading the AI PC category,” Gelsinger asserted, with expectations for unit shipments to double in Q2. He noted ongoing backend constraints but emphasized efforts to enhance wafer assembly capacity.
Describing AI PCs as a transformative category with expanding applications, Gelsinger compared it to a “Centrino moment,” which refers to Intel’s pioneering efforts in wireless technology.
“Every PC will eventually become an AI PC,” he affirmed, highlighting the gradual benefits that AI PCs will bring.
Looking ahead, Intel plans to release its Gaudi 3 and Falcon Shores GPUs next year, specifically engineered for AI workloads.
“We are one of just two or three companies globally capable of enabling next-generation chip technologies,” Gelsinger stated.
Intel also introduced the Intel Edge Platform, an open software framework for enterprises to develop, deploy, and manage edge and AI applications efficiently. Additionally, its Open Platform for Enterprise AI aims to accelerate generative AI deployments through retrieval-augmented generation (RAG).
Ranking
