Intel surpasses Q1 earnings expectations but disappoints with revenue outlook, causing stock to drop over 5%

Intel (INTC) reported its first quarter earnings results, surpassing analysts’ expectations with earnings per share (EPS) of $0.18 on revenue of $12.72 billion. This beat Wall Street’s estimates of an EPS of $0.13 and revenue of $12.71 billion. However, the company’s Q2 outlook fell short of expectations, with Intel anticipating revenue between $12.5 billion and $13.5 billion, below analysts’ expectations of $13.63 billion.

Intel is focusing on growing its AI market share by introducing its new Gaudi 3 AI accelerator to compete with rivals Nvidia (NVDA) and AMD (AMD). The company is also aiming to attract consumer and enterprise customers with its AI PC lineup, featuring Core Ultra processors with built-in neural processing units (NPUs) for running AI models on laptops.

Despite the positive first quarter results, Intel’s stock slid after the Q2 outlook announcement. The company is undergoing a transformation from designing and manufacturing its own chips to becoming a chip manufacturer for third-party clients. This shift includes restructuring its reporting segments, with revenue from Client Computing Group and Data Center and AI now falling under the Intel Products segment.

Intel’s move to a foundry model puts it in direct competition with TSMC (TSM), the world’s largest chip manufacturer. The company is also facing competition from AMD and Nvidia in the AI PC chip market, with Qualcomm (QCOM) introducing new processors to rival Intel and AMD chips. Intel’s focus on AI and PC market growth will be crucial in maintaining its position in the competitive semiconductor industry.