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Intel Corporation announced its first-quarter earnings today under its new financial structuring model, as it seeks to establish itself as a market leader in AI hardware.
The company today reported first-quarter revenue of $12.7 billion, up 9% year over year (YoY). It is forecasting second-quarter 2024 revenue to be $12.5 to $13.5 billion.
While Q1 beat analysts’ expectations, the company’s Q2 outlook sent stocks down 8% because it did not meet analysts’ anticipated $13.63 billion for the coming quarter. Its adjusted earnings per share (EPS) was $0.18 on revenues of $12.72 billion.
“We delivered solid Q1 results,” CEO Pat Gelsinger said on today’s earnings call. He noted that the numbers were “moderately weaker than what we anticipated” and that Intel expects Q1 to be “the bottom,” with earnings accelerating throughout the year.
However, Intel execs touted the company’s growing AI capabilities. Notably, it is challenging its rivals Nvidia and AMD with its new Gaudi 3 AI accelerator, which it says will deliver an average of 50% faster inference and 40% greater inference power efficiency than Nvidia H1001 on leading gen AI models. Intel is also increasingly emphasizing its AI PC lineup.
“AI is a hot market, we’re participating across all of our segments,” Gelsinger said. “We’re delivering AI everywhere.”
Growth in products group, steep decline in Intel Foundry
Intel recently announced a restructuring, with revenues from its client computing group, data center and AI and network and edge division falling under “Intel Products.” Intel’s Foundry semiconductor business unit now reports under “Intel Foundry.” Its semiconductor business Altera, software business Mobileye and other functions, meanwhile, fit into a new “All Other” segment.
The company’s Intel Products reached $11.9 billion, a 17% YoY growth. Its client computing products rose to $7.5 billion, up 31% YoY. Its data center and AI products reached $3 billion (5% YoY), and its network and edge segment grew to $1.4 billion (8% YoY).
By stark contrast, “Other” revenue came in at $775 million, a decrease of 46% YoY. Also, its Intel Foundry business reported $4.4 billion in revenue during the quarter, which was down 10% YoY.
However, Gelsinger forecasted that “every quarter from here until the decade ends, we’ll be seeing improvement in Intel Foundry.”
Ultimately, “we are encouraged by our progress,” said Gelsinger, “but far from satisfied.”
AI PCs present a ‘Centrino moment’
Intel continues to ramp up its AI PC products, delivering more than initially anticipated. The company launched its Intel Core Ultra processors in December 2023, and as of the end of the first quarter, it shipped more than 5 million AI PCs. The company expects to exceed its prior forecast of 40 million AI PCs by the end of 2024.
“We are defining and leading the AI PC category,” said Gelsinger, noting that units are expected to double sequentially in Q2. “This is a hot product. We’ve just been incrementing up our AI PC.”
He noted that there have been constraints on the back end around wafer levels and the company is “working to catch up” and build more wafer level assembly capacity.
Gelsinger called AI PCs a new category with a multitude of growing use cases. Every independent software vendor (ISV) is “AI-ifying their apps,” he said, calling it a “Centrino moment” (referring to Intel’s Wi-Fi and WiMAX wireless computer networking adapters).
“Every PC is going to become an AI PC over time,” he said. “We’re going to incrementally benefit from AI PC.”
On the back end, the company’s Gaudi 3 and Falcon Shores — which Intel says is the first GPU architecture designed solely for AI workloads — are expected next year.
“We are one of two, maybe three companies in the world, that can continue to enable next-generation chip technologies,” Gelsinger asserted.
The tech giant has also recently introduced the Intel Edge Platform, an open software to help enterprises develop, deploy and manage edge and AI applications at scale. Also, its Open Platform for Enterprise AI aims to accelerate gen AI deployments through the use of retrieval-augmented generation (RAG).