Intel Q2 earnings: ‘it has been slower to execute in AI’

Intel Corporation (NASDAQ: INTC) just reported a surprise profit for its fiscal second quarter. Shares are up 8.0% in after-hours.  

Intel issues upbeat earnings outlook

Investors are also cheering the company’s earnings guidance for Q3. Intel forecasts 20 cents of per-share earnings in its current quarter versus analysts at 16 cents.

In terms of revenue, though, it sees $12.9 billion – about $320 million below the consensus. According to Wedbush Securities analyst Matt Bryson:

I think Intel needs to improve where its execution is in the server CPU space. But then also, new opportunities like AI, I think Intel has been a bit slower to execute in that category.

Adjusted gross margins are expected at about 43% in the third quarter, as per the press release. Intel shares are now up 40% versus the start of the year.

Intel Q2 financial highlights

• Net income printed at $1.48 billion or 35 cents per share
• Had $454 million of loss in the same quarter last year
• Adjusted EPS printed at 13 cents as per the press release
• Revenue declined nearly 16% year-on-year to $12.95 billion
• Consensus was 4 cents of loss on $12.12 billion revenue

Adjusted gross margin stood at 39.8% in the recently concluded quarter. On Yahoo Finance Live, the Wedbush analyst added:

I think you have a number of mega trends that will drive more semiconductor demand. You’ve got AI, EVs, AR/VR

Is Intel stock worth buying today?

Intel topped experts’ forecast for both PC and data-centre sales in Q2. Wedbush’s Bryson also noted:

Today tells us that at least we’ve seen a bottom, particularly in PC category. Given their share in that space, it’s a nice gas generator they can use to allow them to invest in other interesting areas.

Still, he has a $30 price target on Intel stock that suggests about a 20% downside from here.

Other notable figures in the earnings report include $232 million of foundry services revenue that topped consensus by a significant margin. But network and edge sales came in slightly below expectations.