Synopsis
Intel investors are watching supply chain challenges affecting chip production for AI services. The company anticipates a revenue and earnings drop in the first quarter. However, its data center and AI segment is projected for growth. Intel is also expanding AI CPU partnerships and joining a major AI chip project. Investors will monitor the success of Intel's 18A manufacturing process.Listen to this article in summarized format
Intel has warned that supply constraints for its server chips that are used alongside graphics processors made by companies such as Nvidia will be most acute in the first quarter before easing in the second.
Intel is expected to report a 1.9% decline in first-quarter revenue to $12.42 billion and a near 90% drop in adjusted earnings per share, according to data compiled by LSEG.
The company's data center and AI segment is expected to grow 6.8% to $4.41 billion.
Intel earlier this month expanded its AI CPU partnership with Google and joined Elon Musk's Terafab AI chip complex project to make processors.
"Rising demand for CPUs in AI data centers gives the company a steadier revenue lifeline that's less dependent on the consumer PC cycle," eMarketer analyst Jacob Bourne said.
Investors will also pay attention to the yields, or the number of good chips per silicon wafer, of Intel's 18A manufacturing process.
"For Intel to make an outsized bid here, their 18A yield improvement has to be ... better than market expectations," said Ryuta Makino, analyst at Intel investor Gabelli Funds.
