Intel Earnings to Focus on AI Growth and Supply Chains

Investors will closely monitor INTEL CORP when it reports earnings this Thursday, seeking clarity on whether supply chain complications are hindering its expansion into the artificial intelligence sector. The semiconductor giant has previously cautioned that shortages of server chips—which are frequently paired with graphics processors from companies like NVIDIA CORP—would be most prominent during the first quarter before improving in the following months.

Financial projections from LSEG suggest a challenging quarter for the firm. Analysts anticipate a 1.9% decrease in first-quarter revenue to approximately $12.42 billion, alongside a nearly 90% plunge in adjusted earnings per share. Despite these figures, the company's data center and AI division is projected to see a 6.8% increase, reaching $4.41 billion.

To bolster its position, the company recently broadened its AI CPU collaboration with ALPHABET INC-CL A and joined Elon Musk’s Terafab AI chip initiative. These strategic moves aim to capitalize on the surging demand for processors in AI-focused data centers.

Rising demand for CPUs in AI data centers gives the company a steadier revenue lifeline thats less dependent on the consumer PC cycle.

Market participants are also expected to scrutinize the yields of the 18A manufacturing process, which measures the volume of functional chips produced per silicon wafer. Improving these yields is considered vital for the company's long-term competitive standing.

For Intel to make an outsized bid here, their 18A yield improvement has to be better than market expectations.