Intel reports better-than-expected first-quarter earnings, but falls short of revenue expectations. The stock fell more than 5%

Intel (INTC) reported its first-quarter earnings results after the bell on Thursday, beating analysts' expectations for both top and bottom line results. But the company's second-quarter forecasts fell short of Wall Street estimates, sending the stock lower.

Intel said it expects second-quarter revenue to range between $12.5 billion and $13.5 billion. Analysts were expecting $13.63 billion for the next quarter.

Intel is looking to increase its AI market share by challenging rivals Nvidia (NVDA) and AMD (AMD) with its new Gaudi 3 AI accelerator, while hoping it can attract consumer and enterprise customers with its AI-powered PC lineup Artificial.

Intel reported adjusted earnings per share (EPS) of $0.18 on revenue of $12.72 billion. Wall Street was expecting earnings per share of $0.13 and revenue of $12.71 billion, according to consensus data compiled by Bloomberg. The company reported a loss per share of $0.04 on revenue of $11.7 billion in the same quarter last year.

February 21, 2024, USA, San Jose: Intel CEO Pat Gelsinger presents chips with new production technology.  Chip maker Intel has announced plans for its own manufacturing division.  Photo: Andre Sokolow/DPA (Photo by Andre Sokolow/Image Alliance via Getty Images)

Intel CEO Pat Gelsinger introduces chips with new production technology. (Photo by Andre Sokolow/Image Alliance via Getty Images) (Photo Alliance via Getty Images)

Intel is in the midst of transforming itself from a designer and manufacturer of its own chips into a manufacturer of chips for third-party customers. So far, the company has revealed that Microsoft (MSFT) will be among its first customers, as the Windows maker looks to develop its own custom chips.

The first quarter marks the first time Intel has reported earnings under its new corporate structure. The company now reports revenues from its Customer Computing, Data Center, AI, and Network and Edge divisions within its Intel product segment. Altera, Mobileye, and Other now report under all other segments, while Intel's Foundry business reports under Intel Foundry.

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The foundry's revenue comes from the production of Intel chips and third-party chips. However, in announcing the restructuring, Intel also revealed that its foundry business lost $7 billion last year.

The move puts Intel in direct competition with TSMC (TSM), the world's largest chip maker. But there are doubts that the third-party foundry business will be a significant source of income.

Intel is looking to capitalize on the AI ​​craze through the PC market with its new Core Ultra processors. The chips, which feature embedded neural processing units (NPUs), are designed to run AI models on your laptop, not in the cloud. The idea is that you can benefit from AI applications without having to connect to the Internet or share your data.

AMD, Intel's main competitor in the PC space, also offers its own AI-enabled PC chips, while Nvidia says the laptops running its chips are considered AI-enabled PCs as well. On Wednesday, Qualcomm debuted the Snapdragon X Plus chip to go along with the Snapdragon

Qualcomm (QCOM) claims its chips can outperform some Intel Core Ultra and AMD chips in terms of performance and battery life. The company's new processors will go on sale later this year.

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Email Daniel Howley at [email protected]. Follow him on Twitter at @Daniel Holly.

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