Another kitchen sink type of earnings day from chip giant Intel (INTC).
Intel stock (INTC) rose slightly in premarket trading on Friday as the struggling US icon managed to serve up better-than-expected fourth quarter guidance. Shares had been up about 8% late Thursday, but a cautious earnings call subdued sentiment.
“This was a critical quarter for us, and I think [it] gives optimism for what is to come,” Intel CEO Pat Gelsinger told Yahoo Finance moments after the company’s earnings call ended (video above).
The somewhat positive market reaction may be a tad overdone when digging into the quarterly results.
Intel revealed $15.9 billion in total non-cash charges related to inventory write-downs and lower performance expectations for certain businesses, such as autonomous driving firm Mobileye (MBLY), where it owns a majority stake. The company reported a $5.8 billion operating loss at Intel Foundry — Intel’s upstart chipmaking business — on $4.4 billion in sales.
Intel took a cautious stance on the health of the foundry business and its artificial intelligence product roadmap in 2025.
“The bad news, in our view, is that Intel’s AI strategy appears to have changed again, now with what seems to be a longer-term approach that centers on the traditional CPU+co-processor/accelerator approach to Enterprise class AI workloads,” Stifel analyst Ruben Roy said in a client note on Friday.
On the earnings call, management promised to continue executing a $10 billion cost-cutting plan and exploring alternative sources of funding to support chipmaking ambitions.
Gelsinger told Yahoo Finance that no deal is imminent in terms of external funding.
He reiterated that Intel will push forward with opening chipmaking plants in states like Ohio and Arizona despite not receiving billions of dollars in funding yet from the CHIPS Act.
The Biden administration has earmarked $8.5 billion in direct funding to Intel for its projects, but the company is still awaiting the cash as government officials iron out milestones that it must hit.
“Overall, we are seeing the CHIPS Act as a critical thing that we’ve invested a lot of time and energy into, and as we said on our earnings call, we’re disappointed by the time that it’s taken to get done,” Gelsinger said.
“It’s well over two years since the CHIPS Act passed. And over that period, I’ve invested $30 billion in US manufacturing and we’ve seen $0 from the CHIPS Act. This has taken too long. We need to get it finished.”
To be sure, Wall Street still sees a bumpy road ahead for Intel.
