Intel Corporation is set to release its first-quarter financial results after the market close on Thursday, with investors closely watching whether renewed demand for AI-linked server processors can translate into a sustainable turnaround. The company's stock has surged more than 70% year-to-date, driven by optimism around a shift in AI workloads from training to inference, which increasingly relies on central processing units (CPUs) alongside Nvidia's graphics processors.
Key Financial Expectations
Analysts surveyed by LSEG project first-quarter revenue of approximately $12.42 billion, a decline of 1.9% compared to the same period last year. Adjusted earnings are expected to plummet by nearly 90%, reflecting ongoing cost pressures and investment in manufacturing. Intel had previously guided for revenue between $11.7 billion and $12.7 billion, with adjusted earnings around break-even. The company will discuss the results on a conference call scheduled for 2:00 p.m. PT.
Data Center and AI Unit Performance
The spotlight will be on Intel's Data Center and AI segment, where revenue is forecast to grow 6.8% to $4.41 billion. However, investors are eager for signs that supply chain disruptions experienced in the first quarter are beginning to ease. "Rising demand for CPUs in AI data centers gives the company a steadier revenue lifeline," noted Jacob Bourne, an analyst at eMarketer. The shift toward inference workloads, where systems answer user requests, has increased the importance of CPUs, providing Intel with an opportunity it lacked earlier in the AI boom.
Stock Rally and Analyst Caution
The stock's impressive run has raised the bar for the upcoming report. Shares have climbed over 70% this year, buoyed by recent analyst upgrades from BNP Paribas and HSBC. However, some analysts urge caution. Wedbush's Matt Bryson commented that the stock "has gotten ahead of reality," while RBC Capital Markets' Srini Pajjuri warned that enthusiasm around Intel's foundry business may outpace actual revenue opportunities.
Recent Developments and Bullish Catalysts
Intel has been building a bullish case through recent announcements. Google expanded its AI infrastructure collaboration with Intel, utilizing Xeon CPUs and custom infrastructure processing units (IPUs). Tesla also revealed plans to use Intel's next-generation 14A process for its Terafab project, marking Intel's first major disclosed customer for that technology. "Having a customer is more important than the timing," said Jay Goldberg of Seaport Research Partners.
Foundry Business and Financial Moves
The contract chipmaking business remains a critical test for Intel. Investors are monitoring progress on the 18A manufacturing process for improved yields and signs that the 14A node can attract more external clients as Intel challenges Taiwan Semiconductor Manufacturing Co. (TSM). On the financial front, Intel agreed on April 1 to buy back Apollo Global Management's 49% stake in its Ireland fab for $14.2 billion, a move CFO David Zinsner said reflects a "stronger balance sheet" and tighter financial discipline.
Risks and Headwinds
Despite the optimism, significant risks persist. Intel has warned that memory shortages are driving up PC prices, which could weigh on its client-computing business. Any further delays in resolving server-chip supply constraints would disappoint a market already pricing in a robust recovery. Additionally, meaningful foundry revenue from external customers may still be years away. The company also continues to face intense competition from AMD in server and PC chips, while Nvidia maintains dominance in the AI accelerator market.
Conclusion
Intel shares last traded at $65.27, giving the company a market capitalization of approximately $296 billion. While Thursday's quarterly results will be closely scrutinized, the tone around second-quarter supply chain dynamics and the sustainability of AI CPU demand may have an even greater impact on investor sentiment moving forward.
