Intel’s revenue forecast disappoints as investors await new CEO

(Reuters) -Intel’s first-quarter revenue forecast on Thursday missed analyst estimates, as the chipmaker grapples with tepid demand for traditional data center chips and declining share in the key personal computer market.

Shares of the Santa Clara, California-based company fell close to 2% in volatile extended trading. Last year, Intel’s shares lost about 60%.

As the chipmaker undergoes a historic transition and attempts to emerge from one of its bleakest periods, it has also struggled to cash in on a boom in investment in advanced AI chips – a market led by Nvidia.

In its quarterly report after the bell, Intel said it expects first-quarter revenue of $11.7 billion to $12.7 billion, compared with analysts’ average estimate of $12.87 billion according to data compiled by LSEG.

Companies looking to capitalize on generative AI technology have prioritized spending on specialized AI processors that can churn huge amounts of data, crimping demand for the traditional server processors that Intel sells.

The company’s outlook “reflects seasonal weakness magnified by macro uncertainties, further inventory digestion and competitive dynamics,” interim co-CEO and chief financial officer David Zinsner said in a statement.

Intel last year scrapped a 2024 forecast that it would sell over $500 million worth of its new AI processors, named Gaudi, suggesting they struggled to compete against Nvidia’s chips.

On an adjusted, per-share basis, Intel forecast it would break-even for the current quarter. Analysts expect adjusted profit of 9 cents per share.

It is spending heavily to become a contract manufacturer of chips for other companies, leading some investors to worry about pressure on its cash flows.

Former CEO Pat Gelsinger was ousted last month, leaving two temporary co-CEOs at the helm and shrouding Intel’s turnaround strategy in uncertainty.

Intel reported fourth-quarter revenue fell 7% from a year earlier to $14.26 billion, beating estimates of $13.81 billion.

The PC market – Intel’s largest by revenue share – saw global shipments rise only modestly last year, underperforming analysts’ expectations of a strong rebound after months of declines.

The company has also been losing share in the PC and server CPU market to rival AMD, a trend analysts expect to continue into 2025.

(Reporting by Arsheeya Bajwa in Bengaluru and Max Cherney in San Francisco; Editing by David Gregorio)