Intel Stock Drops 9%, Are they Struggling?

Key Takeways on Intel 2024 Q1 Earnings

• Revenue for Q1 was $12.7 billion, marking a 9% year-over-year increase.
• Gross margin stood at 45.1%, which was 60 basis points above guidance.
• Earnings per share (EPS) were reported at $0.18, surpassing the guidance by $0.05 due to operating expense management and strong inventory sell-through.
• Operating cash flow was negative $1.2 billion, with net capital expenditures amounting to $5 billion, resulting in an adjusted free cash flow of negative $6.2 billion.
• Dividends paid during the quarter totaled $0.5 billion.

Despite surpassing revenue and earnings estimates for the first quarter, Intel (INTC) stock plummeted over 9% in after-hours trading, triggered by its issuance of a weaker-than-expected revenue forecast for the second quarter.

Reasons for Intel Stock Price Decline

• Weaker Revenue Guidance for Q2 2024: Intel forecasted second-quarter revenue to be between $12.5 billion and $13.5 billion. This guidance was below the consensus among analysts, who expected a higher revenue figure of $13.79 billion.
• Market Reaction to Guidance: The stock market often reacts not just to current performance but also to future expectations. Intel's guidance suggested potential challenges or slower growth ahead, which likely concerned investors and led to the sell-off in after-hours trading.

“Q1 revenue was in line with our expectations and we delivered non-GAAP EPS above our guidance, driven by better-than-expected gross margins and strong expense discipline,” said David Zinsner, Intel CFO.

Intel's First Quarter Performance Compared to Analyst Expectations

Revenue Expectations vs. Actual:

• Analysts had expected Intel to post a revenue of approximately $12.8 billion for the first quarter.
• Intel reported a first-quarter revenue of $12.7 billion, which is slightly below the analysts' expectations.

Earnings Per Share (EPS) Expectations vs. Actual:

•  Analysts had forecasted earnings of $0.14 per share for the first quarter.
•  Intel's non-GAAP earnings per share were not explicitly mentioned in the provided context for the exact figure, but the CFO mentioned that the non-GAAP EPS was "above our guidance". This suggests that the actual EPS might have exceeded the expected $0.14, aligning with the statement of performing above their own guidance.

Sector-Specific Performance:

•   The Intel Foundry Services segment was expected to continue facing challenges. Indeed, this segment saw a revenue drop of 10% to $4.4 billion in the first quarter.
•   Data center sales, which were a point of concern due to expected declines, actually rose by 5% to $3 billion.

Stock Market Reaction:

Despite some areas of performance meeting or exceeding expectations, Intel shares tumbled by 9% in after-hours trading following the announcement of the quarterly results. This reaction indicates that the overall market sentiment was negatively influenced, possibly due to the mixed results and slight miss on the revenue expectation.

Disclaimer: This analysis is based on the provided stock chart snapshot and is not a substitute for professional investment advice. Always conduct your own research or consult a financial advisor before making investment decisions. Try Intellectia.AI to get more details.