Intel returns to profitability, beats forecasts in Q2 earnings
Intel (Nasdaq: INTC) heralded second-quarter results above its guidance and analyst expectations on Thursday as the chipmaking giant continued to try to claw its way back to industry leadership.
After two quarters of losses, Intel made a profit of $1.5 billion on revenue of $12.9 billion for the quarter ended July 1 — past its $12 billion midpoint guidance and consensus analyst forecasts just above $12 billion. Analysts had anticipated another loss.
The results, reported after markets closed, boosted Intel shares in after-hours trading. The stock, after closing at $34.55, was up around 6% to $36.72 as of 1:45 p.m.
“Our overall position is strengthening,” CEO Pat Gelsinger told analysts, adding later, “simply put, it was a very good quarter.” Still, he and CFO Dave Zinsner noted that the selling environment was improving only slowly, particularly for server chips.
“The pace of recovery remains moderate,” Zinsner said.
Intel, one of the Valley’s largest employers with more than 12,000 workers in the Phoenix metro, is in the midst of a $20 billion expansion of its Ocotillo Campus in Chandler.
Down compared to 2022
The Q2 results were hardly blockbuster — revenue across three major business units was down from 12% to 38%, respectively, year over year — but confirmed that Intel had bottomed out in late 2022 and early 2023.
The company lost $644 million in the last quarter of 2022 and a record $2.8 billion in the first quarter of 2023 amid a dismal PC market, where it makes the bulk of its sales. But executives forecast a modest rebound and its PC processor segment saw sales rise from $5.8 billion to $6.8 billion quarter over quarter.
Cost-cutting, a big focus since last fall, was a smaller factor in the improved results, Intel executives said, though they touted progress nonetheless.
“Strong execution, including progress towards our $3 billion in cost savings in 2023, contributed to the upside in the quarter,” Zinsner said in prepared remarks.
Third-quarter guidance
For the third quarter, Intel forecast continued modest sales growth, guiding revenue of $12.9 billion to $13.9 billion and earnings per share of 20 cents, 4 cents on an adjusted basis.
Gelsinger spent much of Thursday’s call with analysts touting how the artificial-intelligence boom could help Intel, not just companies the Nvidia graphics processing chips widely used for AI.
The idea is that new Intel CPUs with intrinsic AI capabilities will become attractive, though in the short term customer infatuation with Nvidia may hurt Intel. In the long run, he said, AI would be “expansive for server CPUs” and a driver of PC process demand.
“We see this as a true AI PC moment,” Gelsinger said.