Intel stock falls after company offers soft first-quarter guidance

Intel's recent financial report showcased fourth-quarter results that exceeded Wall Street's expectations, yet the company's outlook for the first quarter fell short, leading to a significant drop in its stock price by as much as 5% in after-hours trading. The chip giant forecasts its first-quarter revenue to be between $11.7 billion and $12.7 billion, with adjusted earnings per share projected at 0 cents. This guidance contrasts sharply with the LSEG consensus, which anticipated earnings of 5 cents per share on sales of $12.51 billion. Adding to the disappointment, Intel reported a net loss of $600 million, equating to 12 cents per diluted share, compared to a net loss of $100 million, or 3 cents per share, in the same period last year. Despite this unfavorable forecast, there is an air of optimism surrounding Intel, fueled by a remarkable 147% increase in stock value over the past year. This surge has been largely attributed to the possibility that Intel is nearing its first major anchor customer for its foundry services, which produce chips for other companies. CEO Lip-Bu Tan highlighted the success of the company’s 18A manufacturing technology, which competes with Taiwan Semiconductor Manufacturing Company’s 2nm technology, stating it had “over-delivered” in the previous year, signaling readiness for high-volume production of products like Intel's Core Ultra Series 3 processors. In a recent statement, Tan noted that Intel is “working aggressively” to ramp up its 18A supply to meet robust customer demand. CFO David Zinsner revealed to CNBC that the company expects to see customers for its next-generation 14A technology in the latter half of the year, although he cautioned that announcements regarding clients are unlikely until the company is prepared to invest significantly in 14A production. The disappointing first-quarter guidance can be attributed partly to insufficient supply to meet seasonal demand. Intel's foundry revenue stood at $4.5 billion, though a portion of this figure includes manufacturing its own chips. Additionally, there is buoyancy linked to strong sales of Intel's latest server chips, which analysts credit to heightened investments in infrastructure for artificial intelligence. Tan emphasized that Intel’s CPUs are increasingly vital for AI-driven systems, with Data Center and AI sales reaching $4.7 billion during the quarter, marking a 9% increase year-over-year. In contrast, the Client Computing Group, which encompasses chips for laptops, experienced a decline of 7% year-over-year, totaling $8.2 billion in sales. Notably, significant investments from the U.S. government, SoftBank, and Nvidia have positioned these entities as major shareholders in Intel, with a $5 billion stock sale to Nvidia finalized during the quarter.