Intel Corporation INTC is scheduled to report second-quarter 2024 results on Aug 1, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded lower revenues from the Datacenter and AI Group (DCAI) segment, owing to the fierce competition from other industry leaders amid a challenging macroeconomic environment.
However, the introduction of a leading-edge product suite, including the Intel Gaudi 3 accelerator, integrated optical compute interconnect chiplet and advancements in AI-accelerated high-performance computing, may have acted as a tailwind.
Factors at Play
The DCAI segment seeks to develop leading data center products, including Intel Xeon servers and field programmable gate array products, while overseeing the overall artificial intelligence (AI) strategy.
During the quarter, Intel introduced the industry’s first fully integrated optical compute interconnect (OCI) chiplet, marking a significant step forward in high-speed data transmission. Co-packaged with next-generation CPU, GPU, IPU and other Systems-On-Chip, the chiplet is likely to pave the way for emerging AI infrastructure for data centers and high-performance computing applications. The OCI chiplet promises to deliver higher bandwidth with lower power consumption and longer reach.
The company also introduced the Intel Gaudi 3 accelerator and a suite of open, scalable systems for a significant leap forward in advancing AI adoption across various sectors. The Intel Gaudi 3 AI accelerator, designed to deliver unparalleled performance, openness and choice, is poised to power AI systems with remarkable efficiency. Equipped with up to tens of thousands of accelerators interconnected through Ethernet, the Gaudi 3 accelerator promises a substantial boost in AI training and inference capabilities, enabling global enterprises to deploy AI at scale with ease. These developments have supported the DCAI segment’s top line during the quarter.
However, intensifying competition from other industry leaders including Advanced Micro Devices, NVIDIA is affecting net sales. Soft demand in some end markets and macro headwinds are a concern.
Overall Expectations
The Zacks Consensus Estimate for Data Center and AI revenues is pegged at $3.08 billion, indicating a decline from $4 billion in the year-ago quarter. Our estimate for revenues from this segment is pegged at $2.95 billion, suggesting a 6.4% year-over-year decline.
For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $12.92 billion, which indicates a decrease from the year-ago quarter’s reported figure of $12.95 billion. The consensus estimate for adjusted earnings per share stands at 10 cents, suggesting a decline from the 13 cents reported in the prior year.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Intel for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +10.79%. The Most Accurate Estimate is pegged at 11 cents and the Zacks Consensus Estimate stands at 10 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Zacks Rank: Intel has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Fortinet FTNT is set to release quarterly numbers on Aug 6. It has an Earnings ESP of +3.41% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for BWX Technologies BWXT is +0.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 5.
The Earnings ESP for Watts Water Technologies WTS is +1.17% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 7.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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