Categories Analysis, Technology

Intel (INTC) Q1 Earnings Preview: Chipmaker appears mostly unaffected by COVID-19

This image has an empty alt attribute; its file name is Intel-image-1024x390.jpg

The impact of the coronavirus outbreak on the highly cyclical semiconductor industry is yet to be fully assessed even as the shutdown is having a devastating impact on businesses. Intel Corp. (NASDAQ: INTC), a market leader in microprocessor technology, is scheduled to publish its first-quarter earnings on Thursday after the market’s close.

Intel’s (INTC) Q4 results beat estimates

There has been a progressive decline in the outlook for S&P 500 components since the pandemic struck. However, technology has helped most enterprises mitigate the impact of the crisis to a great extent. With a large number of people working remotely, employers and organizations are enhancing their data center capacity and cloud computing capabilities, thereby creating a high demand for chips.

Also Read:  Intel (INTC) stock looks undervalued on supply concerns

It is expected to have had a positive effect on the finances of companies offering such services, including Intel. Its high-speed Xeon Scalable processor has been a big hit and remains the preferred foundation for AI-infused data center workloads. The recent acquisition of Habana Labs is expected to boost the company’s AI capabilities. Meanwhile, rival chipmaker Advanced Micro Devices (AMD) is giving a tough competition in that area with its EPYC 7Fx2 processors.

Resilience

With strong fundamentals, Intel will likely be able to tackle the present crisis effectively. Recently, it raised dividend by 5% and paused share repurchases to strengthen the cash position, in view of the pandemic-linked uncertainty. That makes Intel one of the few Wall Street firms that offer a good investment opportunity in these difficult times.

The company has been leveraging the rapid adoption of semiconductor-based solutions across industries and continues to ramp up its prowess in the promising areas of big data and cloud computing.

Impressive Show

Intel’s earnings beat estimates consistently in 2019 and the company ended the year on a positive note, mainly on the strength of the data center business and growing demand in the PC segment. In the fourth quarter, solid revenue performance across all the key business segments resulted in a double-digit earnings growth. More than 50% of revenues came from data-centric business.

Q1 Outlook

The trend is expected to have continued in the most recent quarter. Market watchers predict a 43% annual increase in earnings to $1.27 per share in the March-quarter on revenues of $18.67 billion, which represents a 16% growth. The estimate has remained broadly unchanged in the past three months.

Meanwhile, it is doubtful whether the management would maintain its bullish full-year outlook, considering the changed market scenario in the wake of the COVID-19 outbreak.

Peer Performance

AMD will be reporting its latest quarterly results before month-end. Earlier this week, IBM (IBM) reported not-so-impressive results for the first quarter, with weakness in the technology services segment more than offsetting revenue growth in the cloud segment.

Also Read:  Stock Analysis: COVID-19 testing kit gives Abbott (ABT) an edge over Boston Scientific (BSX)

Though Intel made a strong recovery after being hit by the market selloff in early March, the stock lost momentum ahead of the earnings announcement and closed the last session down 2%. In the past twelve months, the shares gained 13%.

Most Popular

COVID-19 drove retailers up the digital path years ahead than anticipated

Earlier we looked into how, during the COVID-19 pandemic, retailers saw changing trends in terms of their assortments and how the acceleration of online shopping led many of them to

Snowflake (SNOW) creates a record as the most successful software IPO ever; stock more than doubles

Data is at the heart of business innovation. Recognizing this trend, companies are seeking ways to transform their businesses by capturing, analyzing, and mobilizing data. The public cloud is becoming

Adobe (ADBE) sees new tailwinds as virtual shift gathers steam

The second half has been highly rewarding for design software maker Adobe Inc. (NASDAQ: ADBE) amid stable demand for digital content solutions. The company has remained unaffected by the virus-related

Top