Intel sinks after first quarter outlook disappoints

Intel (INTC) stock fell more than 5% in after-hours trade on Thursday after the company reported fourth quarter results that topped estimates but offered an outlook for the current quarter that came in below expectations.

For the first quarter, Intel expects adjusted earnings per share to total $0.13, well below the $0.34 analysts were expecting, according to data from Bloomberg. Revenue in the current quarter is expected to come in between $12.2 billion-$13.2 billion; analysts had expected first quarter revenue to come in closer to $14.2 billion.

In the fourth quarter, Intel reported adjusted earnings per share of $0.54, better than the $0.44 expected by analysts, while revenue came in at $15.4 billion, better than the $15.2 billion expected.

CFO David Zinsner said the company “comfortably achieved” its goal of delivering cost savings north of $3 billion in 2023.

Looking at the company’s business units, Intel also saw results in its Data Center and AI unit fall short of expectations, with revenues tallying $4 billion in the fourth quarter, below Street estimates for $4.1 billion. This marked a 10% decline from the same quarter last year.

The data center and AI business is Intel’s opportunity to take on rivals including Nvidia (NVDA) and AMD (AMD). In December, CEO Pat Gelsinger showed off the company’s upcoming Gaudi3 accelerator designed to power generative AI software and services.

The company’s Client Computing Group posted fourth quarter sales of $8.8 billion, better than the $8.4 billion forecast by analysts and up 33% from a year ago.

The company is also in the middle of its plan to become a foundry for other chip companies. Its Intel foundry services division is expected to have generated $291 million in revenue during the quarter, less than the $343 million expected by analysts.

On Wednesday, Intel announced the opening of its latest chip manufacturing facility in New Mexico. Intel is in the midst of a yearslong turnaround effort seeking to put the…