Intel's fourth-quarter revenue reached $15.4 billion, a 10% increase compared to the same period last year. However, the stock price fell following the company's forecast of lower-than-expected first-quarter results.
For the full year of 2023, Intel generated $54.2 billion in revenue, a decline of 14% from the previous year. Fourth-quarter earnings per share (EPS) were reported at 63 cents, with non-GAAP EPS at 54 cents. The full-year EPS was 40 cents, while the non-GAAP EPS attributable to Intel was $1.05.
Looking ahead, Intel expects first-quarter 2024 revenue between $12.2 billion and $13.2 billion, with anticipated EPS of 25 cents and non-GAAP EPS of 13 cents. This projection falls short of analysts' expectations of 34 cents per share due to specific challenges in divisions like Mobileye, according to CEO Pat Gelsinger. He views these challenges as temporary.
“2023 was a year of accomplishment for us, and we aim to replicate that success in 2024,” Gelsinger stated.
Despite the lower expectations, Gelsinger emphasized the solid Q4 results, with revenue at the upper end of guidance. Additionally, Intel exited five business lines in 2023 and successfully met its $3 billion cost-saving target.
Gelsinger expressed confidence in Intel's progress on its IDM 2.0 journey over the next year.
Intel had initially forecast Q4 revenues between $14.6 billion and $15.6 billion, alongside an EPS of 23 cents and non-GAAP EPS of 44 cents. Following the news, Intel’s stock fell to $46.70, down 5.83%, giving the company a market valuation of $208.9 billion.
In a statement, Gelsinger highlighted, “We delivered strong Q4 results, consistently surpassing expectations for the fourth consecutive quarter. This success capped a year of significant progress in Intel’s transformation, where we drove execution and innovation.”
Intel CFO David Zinsner added that operational efficiencies achieved in Q4 contributed to reaching the $3 billion cost-saving goal, with expectations for further efficiencies in 2024 through the new internal foundry model.
Business Unit Revenue Overview
Intel integrated its Accelerated Computing Systems and Graphics Group into the Client Computing Group and Data Center and AI Group to enhance market responsiveness and reduce costs. As a result, the company modified its segment reporting to align with these structural changes.
In the fourth quarter, revenue from the Client Computing Group (CCG) was $8.8 billion, up 33% year-over-year. The Data Center and AI (DCAI) group reported $4 billion in revenue, down 10%, while Network and Edge (NEX) generated $1.5 billion, down 24%. Mobileye revenue reached $637 million, marking a 13% increase, and Intel Foundry Services (IFS) revenue was $291 million, a 63% rise.
Gelsinger remarked, “Q4 reflects tremendous progress towards our IDM 2.0 transformation. We executed our plan to reestablish process leadership and improve product execution while advancing our mission to integrate AI across all product segments.”
Key Business Highlights
Intel is on schedule to hit its target of five manufacturing nodes in four years and reclaim transistor performance leadership by 2025. The company has introduced its Intel 3 manufacturing technology to IFS customers and commenced enhancements to its first on-site High-NA EUV tool in Oregon.
According to Gelsinger, “We remain committed to being good stewards of Moore’s Law,” referring to the expectation that chips will double in transistor density every couple of years.
Intel Foundry Services has successfully taped out over 75 ecosystem and customer test chips, with 50 more in the pipeline through 2024 and 2025, 75% of which utilize Intel 18A technology. The company shipped over 2.5 million processors from the latest 4th Gen Intel Xeon Scalable family.
Gelsinger emphasized, “Our goals won’t be realized immediately, but we’ve made significant advances towards becoming the second largest external foundry by 2030.” The growing adoption of AI across industries is providing a significant boost to Intel Foundry Services.
Intel completed a strategic agreement with UMC to develop a 12-nanometer process platform targeting high-growth markets, including mobile communications and networking.
Product Developments
In Q4, Intel's data center and AI division launched the 5th Gen Intel Xeon processor, optimized for AI workloads, delivering up to 42% higher AI inference performance than the previous generation. Gelsinger noted that this aligns with Intel's mission to integrate AI broadly, predicting a $1 trillion semiconductor total addressable market (TAM) by 2030.
Intel anticipates shipping approximately 40 million AI PCs in 2024, with over 230 designs ranging from ultra-thin PCs to handheld gaming devices.
In client computing, Intel introduced the AI PC era with its Intel Core Ultra processors and showcased the full Intel Core 14th Gen mobile and desktop processor lineup at CES 2024.
For the full year, Intel generated $11.5 billion in cash from operations and distributed $3.1 billion in dividends. Gelsinger believes that the market will expand compared to last year, contributing to growth in the client computer business.
“We expect consistent quarter-over-quarter and year-on-year growth in revenue and EPS throughout fiscal year 2024,” he stated. “There is strong momentum and excitement surrounding our new products and business initiatives.”
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