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Intel (NASDAQ:INTC) Q4 Earnings Preview: Here’s What to Expect

Story Highlights

Intel is slated to announce its Q4 results on Thursday. Analysts expect the company’s revenue and earnings to decline due to a demand slump in the chips market.

Chip giant Intel (NASDAQ:INTC) is scheduled to announce its results for the fourth quarter of 2022 after the stock market closes on January 26. Analysts’ estimates indicate a steep fall in Intel’s earnings amid a weak demand backdrop. Nonetheless, INTC could rally further if the company manages to beat Wall Street’s expectations. INTC shares have advanced 13.2% year-to-date on improved consumer sentiment.

Q4 Estimates

Intel’s revenue declined 20% to $15.3 billion in the third quarter of 2022, mainly due to lower demand in the personal computer (PC) market. The company also experienced lower demand for its data center chips. Adjusted EPS declined 59% to $0.59 due to dismal sales and margin contraction. Nonetheless, the company topped analysts’ expectations.

For Q4 2022, analysts expect adjusted EPS to plunge 81% to $0.21 and revenue to decline 26% to $14.5 billion. Intel’s Q4 results are expected to be hit by further deterioration in the PC market and higher costs.

Meanwhile, the company is taking initiatives to reduce costs and improve its profitability. The company intends to bring down its costs by $3 billion in 2023 and is targeting annualized cost reductions of $8 billion to $10 billion by 2025-end.  

What is the Prediction for Intel Stock?

Ahead of Q4 results, Bank of America Securities analyst Vivek Arya reiterated his Sell rating for Intel stock due to the anticipated weakness in the first half of 2023 and intense competition from Taiwan Semiconductor Manufacturing (TSM), Nvidia (NVDA), Advanced Micro Devices (AMD), and SoftBank Group’s (SFTBY) Arm Ltd.

Arya’s focus is on the slope of the expected recovery in the second half of 2023. Arya cautioned, “any CY23 FCF outlook that is worse than ‘net’ loss guide of $2-$4bn from CY22E could be disappointing.”

Wall Street’s Hold consensus rating for INTC stock is based on three Buys, 18 Holds, and seven Sells. The average price target of $30.41 implies 1.6% upside from current levels.

Conclusion

Intel has been losing market share to rivals like AMD over the past few years. Macro challenges have made matters worse for the company and are expected to drag down Q4 2022 results. Investors will pay attention to management’s commentary about the upcoming products and the company’s outlook to gauge its ability to regain its position in the semiconductor market.

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