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Intel Stock Rises on Revenue Beat as CEO Search Takes Center Stage

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Intel shares climbed 1.7% in premarket trading on Friday following better-than-expected quarterly revenue, despite the company’s ongoing struggles in the AI-driven chip market. Investors remain focused on Intel’s search for a new CEO after the abrupt departure of Pat Gelsinger, whose four-year turnaround plan was cut short amid persistent challenges.

While Intel’s revenue exceeded modest expectations, its forecast for the current quarter fell below estimates. Analysts at Bernstein noted that investors have become “numb” to Intel’s struggles, suggesting that leadership changes are now the primary concern rather than financial performance.

The company has appointed CFO David Zinsner and senior executive Michelle Johnston Holthaus as interim co-CEOs while the board seeks a long-term replacement. Meanwhile, Intel continues to lose market share to competitors like Advanced Micro Devices (AMD), particularly in the AI sector, where it missed key investment opportunities, including OpenAI.

With AI chip demand soaring, companies are prioritizing specialized processors over traditional server chips, further limiting Intel’s growth. Analysts at Jefferies remain skeptical about Intel’s ability to turn things around, citing its struggling foundry business and lack of major customers.

Despite these challenges, Intel’s stock has fallen 60% over the past year, while AI chip leader Nvidia has surged 171%. As the CEO search progresses, investors will be looking for a strategic vision that can help Intel regain its competitive edge.

Intel’s Quarterly Revenue Tops Expectations, Investors Await New CEO

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Intel (INTC.O) reported better-than-expected results for its December quarter on Thursday, surpassing analysts’ low estimates. However, the chipmaker’s forecast for the upcoming quarter fell short, as it faces weak demand for its data center chips. Investors are also awaiting clarity on Intel’s leadership following the ousting of former CEO Pat Gelsinger last month. Currently, two interim co-CEOs are at the helm of the company, which has struggled to compete with rivals like Nvidia (NVDA.O), particularly in the AI chip market.

The quarterly results were overshadowed by concerns about Intel’s long-term strategy and leadership transition. Despite this, the company’s shares rose by 3.8% in after-hours trading, a relief after a challenging year where Intel’s stock lost around 60% of its value.

Intel’s struggle to capitalize on the booming AI market was evident when Co-interim CEO Michelle Johnston Holthaus announced that the company would shelve its upcoming graphics processing unit (GPU) design, Falcon Shores. Instead, Intel plans to use the chip internally as a test product, with a focus on future data center AI chips.

For the first quarter, Intel projected revenue between $11.7 billion and $12.7 billion, below analysts’ average estimate of $12.87 billion. The company cited “normal seasonality” and potential tariffs under the Biden administration as factors contributing to its cautious outlook. According to CFO David Zinsner, the possibility of tariffs may have prompted some customers to buy Intel’s chips ahead of potential price increases.

Intel’s ongoing transition includes a focus on becoming a contract chip manufacturer for other companies, but this shift has raised concerns among investors about its cash flow. Last year, Intel abandoned its forecast of selling over $500 million worth of its new AI chips, Gaudi, which struggled to compete with Nvidia’s products.

For the upcoming quarter, Intel forecasted break-even adjusted per-share earnings, while analysts expected adjusted profits of 9 cents per share. The company has received federal grants under the CHIPS Act, which helped boost its revenue and profit margins for the fourth quarter.

In the personal computer market, which remains Intel’s largest revenue segment, global shipments grew only modestly last year, missing analysts’ expectations for a stronger rebound. Intel has also been losing market share in both the PC and server CPU sectors to competitor AMD (AMD.O), a trend expected to continue into 2025.

 

ASML to Halt Reporting of Key Metric, Citing Volatility

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ASML, the world’s leading chip equipment manufacturer, has announced it will stop publishing new order bookings, a key metric closely watched by investors. The company argues that the figure is too inconsistent and causes excessive volatility in its stock price.

Instead, ASML believes its own forecasts—based on discussions with chipmakers about their capacity expansion plans—offer a more reliable indicator of future performance. The company’s circuit-printing machinery plays a critical role in chip manufacturing, but orders can take six to 18 months to fulfill, making quarterly booking figures difficult to interpret.

“The swing factor is significant,” said Chief Financial Officer Roger Dassen, explaining the move.

The decision, announced on Wednesday, came as ASML’s stock jumped 7% following better-than-expected fourth-quarter bookings of €7.1 billion ($7.4 billion), a sharp increase from the €2.6 billion recorded in Q3. The fluctuation was likely driven by timing of orders from TSMC, which recently unveiled a $38 billion capital expenditure plan for 2025.

While analysts acknowledge the downside of losing insight into short-term order trends, they largely understand ASML’s reasoning.

“There is downside for investors, as we lose visibility on average bookings and backlog confidence,” said Sara Russo of Bernstein. However, she agreed that a single quarter’s bookings are not the best measure of long-term business health.

Michael Roeg of Degroof Petercam added that capital expenditure announcements from major clients such as TSMC, Intel, and Samsung already provide sufficient indicators of future demand.

Despite market fluctuations, Dassen emphasized that ASML’s full-year sales and margins remained aligned with its January 2024 forecasts.

“If you put all those quarters together, you see it wasn’t too shabby, was it?” he remarked.