Core Viewpoint - Intel Corporation is a leading technology company in the semiconductor industry, facing competition from AMD and NVIDIA. Despite strong fourth-quarter earnings, the stock experienced a sell-off, prompting Roth Capital to adjust its rating to "Neutral" and raise the price target from $40 to $50 [1][2][5]. Financial Performance - Intel reported strong fourth-quarter earnings that exceeded expectations in both revenue and profit [2]. - The company's stock price was $54.32 at the time of Roth Capital's rating adjustment, with a slight increase of 0.07, or 0.13%, on that day [3][5]. Market Activity - Despite Intel's strong earnings, the stock faced a sell-off while broader market indices, including the Dow, S&P 500, and Nasdaq, saw gains, with the Nasdaq increasing by 0.91% [2]. - The trading volume for Intel's stock was 154.05 million shares, indicating active investor interest [4][5]. Stock Performance - Intel's stock traded within a range of $53.08 to $54.59 on the day, with the highest price over the past year being $54.59 and the lowest at $17.67, reflecting significant volatility [3][4]. - The company's market capitalization is approximately $259.1 billion, underscoring its substantial presence in the tech industry [4][5].

Group 1 - U.S. stock futures are trading higher, indicating a positive market sentiment [1] - Booz Allen Hamilton Holding Corp. is expected to report quarterly earnings of $1.29 per share on revenue of $2.75 billion [1] - Intuitive Surgical Inc. reported fourth-quarter revenue of $2.87 billion, exceeding analyst estimates of $2.75 billion, with adjusted earnings of $2.53 per share, surpassing estimates of $2.26 per share [1] - Webster Financial Corp. is anticipated to post quarterly earnings of $1.54 per share on revenue of $643.04 million [1] - Intel Corp. reported better-than-expected fourth-quarter results but provided a weak outlook, expecting first-quarter revenue between $11.7 billion and $12.7 billion, below estimates of $12.49 billion [1] - Analysts expect Slb NV to report quarterly earnings of 74 cents per share on revenue of $9.55 billion [1]

Core Viewpoint - Intel's recent earnings report showed solid demand for its products, particularly in AI, but supply challenges are expected to hinder near-term performance, leading to a decline in stock value despite previous gains [1][2][6]. Financial Performance - Intel reported fourth-quarter revenue of $13.7 billion, a 4% decrease year over year, with non-GAAP earnings per share of $0.15, reflecting a 15% increase year over year [3]. - For the full year, revenue was $52.9 billion, remaining essentially flat year over year [3]. - The company anticipates first-quarter revenue between $11.7 billion and $12.7 billion, which is approximately 11% lower than fourth-quarter revenue, with expected non-GAAP earnings per share of $0.00 [4]. Supply and Demand Dynamics - Supply constraints are identified as the primary issue affecting Intel's outlook, with management indicating that available supply will be at its lowest in Q1 before improving in Q2 and beyond [4][10]. - Demand fundamentals across Intel's core markets remain strong, particularly for AI-related products, which saw a 9% year-over-year revenue increase to $4.7 billion in the fourth quarter [5][6]. Valuation Concerns - Intel's market capitalization is around $230 billion, and the stock is considered expensive given the lack of profitability on a GAAP basis and the anticipated decline in sales for Q1 [7][8]. - The current price-to-sales ratio exceeds 4, which is significantly lower than that of competitors like Nvidia and Broadcom, but still high enough to suggest that investors expect future profitability [9]. Future Outlook - The market is pricing in expectations for improved supply and continued demand growth, but there are concerns about execution issues that have historically affected the company [10][11]. - Management has expressed optimism about supply improvements starting in Q2, and demand visibility remains positive [10].

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Economic Data - Markets experienced a rise, with the Dow gaining 306 points (+0.63%), S&P 500 up 37 points (+0.55%), Nasdaq increasing by 211 points (+0.91%), and Russell 2000 growing by 17 points (+0.64%) [1] - The delayed November Personal Consumption Expenditures (PCE) report indicated Personal Spending increased by 0.3%, which was 10 basis points lower than expected, following a previous drop of 30 basis points to 0.1% [2] - Year-over-year PCE rose to 2.8%, recovering from a 10 basis point dip the prior month, with core PCE also reflecting the same year-over-year increase [3] Company Earnings - Intel (INTC) reported earnings of 15 cents per share, nearly doubling the anticipated 8 cents, with revenues of $13.67 billion surpassing the Zacks consensus of $13.37 billion; however, shares fell by 6.5% due to lowered revenue guidance amid ongoing supply constraints [4] - Intel's Data Center segment grew by 9% year-over-year to $4.7 billion, despite a 7% decline in Cloud computing [5] - Capital One (COF) missed Q4 earnings estimates at $3.86 per share compared to the expected $4.12, but revenues of $15.58 billion exceeded the $15.37 billion forecast; the company also announced the acquisition of AI-based FinTech Brex for $5.15 billion [6] - CSX (CSX) saw its share price increase despite missing Q4 earnings estimates, reporting earnings of 39 cents per share, which was 3 cents below consensus, and revenues of $3.51 billion, slightly below the expected $3.55 billion, attributed to subdued industrial demand [7]

Core Insights - Intel's Q4 earnings report showed an EPS of 15 cents, beating expectations, and revenue of $13.67 billion, also above the estimate of $13.43 billion [1] - Data center and AI revenue for Q4 was $4.74 billion, surpassing the estimate of $4.42 billion, while client computing revenue was $8.19 billion, slightly below the estimate of $8.3 billion [1][2] - The Q1 revenue forecast is between $11.7 billion and $12.7 billion, with a midpoint of $12.56 billion, which is lower than analyst expectations [2][12] Financial Performance - The stock initially dropped about 5% after the earnings report due to weaker guidance, despite a strong performance leading up to the report, with a 40% increase year-to-date and 150% over the past 12 months [2][3] - Analysts noted that the positive sentiment prior to the report was driven by advancements in Intel's 18A manufacturing process and expectations for the foundry business [3][4] Market Outlook - There are concerns regarding PC shipments and the server market for the upcoming year, with analysts questioning the impact of low inventory levels and manufacturing yields on sales [4][6] - The CEO acknowledged that manufacturing yields are not meeting standards, which could limit supply despite strong demand [13][14] Product Development - The server market is showing strength, and there is a growing recognition of the importance of CPUs in AI computing, which could benefit Intel's future sales [8][9] - Initial reviews of Intel's Panther Lake systems were positive, indicating potential for growth in the AI PC segment [11][21] Customer Sentiment - Major PC vendors expressed confidence in Intel's products, suggesting a positive shift in customer perception compared to previous years [20][22] - The company is focused on improving execution and addressing manufacturing challenges to enhance its market position [18][19]

Core Insights - Intel reported $13.67 billion in revenue for Q4 2025, a year-over-year decline of 4.1%, with an EPS of $0.15, up from $0.13 a year ago, indicating a positive EPS surprise of +86.1% compared to the consensus estimate of $0.08 [1] Revenue Performance - Total net revenues for Intel Products Group were $12.93 billion, slightly above the estimated $12.68 billion, but reflecting a year-over-year decline of 0.7% [4] - Data Center and AI revenues reached $4.74 billion, exceeding the average estimate of $4.36 billion, with a significant year-over-year increase of +39.9% [4] - Client Computing Group revenues were reported at $8.19 billion, slightly below the estimate of $8.33 billion, showing a modest year-over-year growth of +2.2% [4] - Intel Foundry Services generated $4.51 billion, surpassing the estimate of $4.39 billion, with a year-over-year change of +0.1% [4] - Net revenues from intersegment eliminations were reported at -$4.34 billion, better than the estimate of -$4.44 billion, with a year-over-year change of +0.6% [4] Stock Performance - Intel's shares have returned +50% over the past month, significantly outperforming the Zacks S&P 500 composite, which saw a change of +0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - Intel's total revenue for Intel Products in 2025 was $49.1 billion, a decrease of $324 million from 2024[123]. - Operating income for Intel Products in 2025 was $12.7 billion, down $269 million from 2024, with a total operating margin of 26%[125]. - Client revenue in 2025 was $27.6 billion, down $1.1 billion from 2024, primarily due to lower client volume and inventory reductions[126]. - DCAI revenue increased by $794 million in 2025, driven by a 9% increase in server volume due to higher hyperscale customer demand[126]. - Consolidated revenue for Intel was $52.9 billion in 2025, a decrease of $248 million from 2024, with CCG revenue down 3% due to lower client volumes[142]. - Gross profit increased by $1.0 billion, or 6%, in 2025 compared to 2024, driven by reduced asset impairments and accelerated depreciation charges[146]. - Operating loss for Intel Foundry was $10.3 billion in 2025, an improvement from a $13.3 billion loss in 2024, primarily due to reduced asset impairments and lower operating expenses[132]. - Mobileye revenue in the "all other" category was $1.9 billion in 2025, up $240 million from 2024, due to improved customer inventory levels[137]. - Operating income for the "all other" category was $264 million in 2025, compared to an operating loss of $57 million in 2024, driven by higher Mobileye revenue[139]. Research and Development - R&D expenses were $13.8 billion in 2025, down from $16.5 billion in 2024 and $16.0 billion in 2023, focusing on AI integration and next-generation process technologies like Intel 18A and Intel 14A[84]. - Total R&D and MG&A expenses for 2025 were $18.4 billion, down 17% from 2024, representing 34.8% of revenue[148]. - R&D expenses for 2025 decreased by $2.8 billion, or 17%, from 2024, primarily due to lower payroll-related expenditures and $610 million of lower share-based compensation[150]. Capital Expenditures and Investments - The company plans significant long-term investments in manufacturing expansion, including a new facility in Ohio[176]. - As of December 27, 2025, the company had commitments for capital expenditures of $9.1 billion for 2026 and $3.7 billion in long-term capital expenditures[177]. - The company initiated the consolidation of assembly and test operations in Costa Rica into larger sites in Vietnam and Malaysia to align capital spending with market demand[118]. - The transition to a disciplined capital deployment strategy in 2025 includes consolidating assembly operations in Costa Rica into larger sites in Vietnam and Malaysia, expected to complete by the end of 2026[72]. Strategic Partnerships and Market Position - A strategic partnership with NVIDIA was announced to co-develop custom client and data center products, leveraging both companies' technologies[28]. - The company aims to revitalize the x86 ecosystem to support evolving market needs, including those driven by various AI applications[28]. - The competitive landscape in the data center CPU market remains intense, with significant competition from AMD, NVIDIA, and custom silicon developers among others[45]. Supply Chain and Manufacturing - The focus on a secure and geographically diversified supply chain is emphasized in light of increased geopolitical tensions[25]. - The company expects supply constraints to persist into 2026, potentially limiting the ability to meet customer demand for CCG and DCAI products[142]. - The semiconductor supply chain remains volatile, with reliance on sole-source providers for critical tools and materials, necessitating close relationships with suppliers to mitigate risks[73]. - The company plans to continue manufacturing the majority of its products in its own factories to optimize performance and meet customer demand, while also streamlining operations by consolidating its Costa Rican assembly and test operations by the end of 2026[31]. Workforce and Organizational Changes - The company had an undesired turnover rate of 7.9% in 2025, compared to 5.9% in 2024[91]. - The company employed 85,100 people as of December 27, 2025, focusing on attracting and retaining top talent[89]. - The 2025 Restructuring Plan led to a 15% reduction in the core Intel workforce, with restructuring charges totaling $2.2 billion, primarily from employee severance and asset impairment[113]. - The company has streamlined organizational structures to enhance agility and accountability, emphasizing technical excellence and customer impact[90]. Environmental Initiatives - The company aims for 95% global renewable electricity use by December 31, 2025, tying executive bonuses to this target[102]. - The company has invested in environmental projects to cut greenhouse gas emissions, energy, and water use[97]. Financial Transactions and Gains - The company divested 51% of Altera for net purchase consideration of $4.3 billion, including $4.8 billion in cash proceeds received in Q3 2025[109]. - The company recorded a $163 million benefit from the reduction of a previously accrued fine of $401 million from 2023, with a guarantee funded by a $340 million deposit[178]. - The company received $5.7 billion in accelerated disbursements under the commercial CHIPS Act agreement[110]. - The company issued 275 million shares to the U.S. Department of Commerce at a price of $20.00 per share as part of the CHIPS Act agreement[110]. - The company completed a share sale to SoftBank Group for 87 million shares at $23.00 per share, totaling $2.0 billion[111]. - The company sold 215 million shares to NVIDIA at $23.28 per share for an aggregate cash purchase price of $5.0 billion[111]. Impairments and Financial Adjustments - The company recognized $3.3 billion in non-cash impairments and accelerated depreciation charges related to manufacturing assets[117]. - Intel incurred $950 million in asset impairments in 2025, significantly lower than the $3.3 billion recognized in 2024[132]. - The company recorded accelerated depreciation charges of $456 million in 2025 due to adjustments in the useful lives of certain manufacturing assets[204]. - The company recognized non-cash impairment charges of $494 million for property, plant, and equipment, while in 2024, the charges amounted to $2.3 billion[206]. Future Outlook - The company anticipates continued momentum in the semiconductor industry, driven by the rapid adoption of AI technologies across multiple sectors[23]. - The company expects a significant decrease in the percentage contribution of Intel Core products to CCG sales in 2026, as sales of Intel Core Ultra processors are anticipated to increase[56]. - Intel expects a hypothetical increase in interest rates of 1% would result in an increase in annual interest expense of approximately $97 million from debt outstanding as of December 27, 2025[196].

Financial Data and Key Metrics Changes - Fourth quarter revenue was $13.7 billion, marking the fifth consecutive quarter of revenue above guidance, driven by strong growth across all businesses, particularly in AI infrastructure [18][20] - Non-GAAP gross margin for Q4 was 37.9%, approximately 140 basis points ahead of guidance, while full year non-GAAP gross margin was 36.7%, up 70 basis points year-over-year [18][20] - Non-GAAP earnings per share for Q4 was $0.15, exceeding guidance of $0.08, driven by higher revenue and stronger gross margins [19][20] - Operating cash flow for Q4 was $4.3 billion, with positive adjusted free cash flow of $2.2 billion [20] Business Line Data and Key Metrics Changes - Intel Products' Q4 revenue was $12.9 billion, up 2% sequentially, with Client Computing Group (CCG) revenue at $8.2 billion, down 4% quarter-over-quarter despite a 16% growth in AI PC units [22][23] - Data Center and AI (DCAI) revenue was $4.7 billion, up 15% sequentially, reflecting strong demand for traditional server compute [24] - Custom ASIC business grew over 50% in 2025, reaching an annualized revenue run rate greater than $1 billion in Q4 [24] Market Data and Key Metrics Changes - The total addressable market (TAM) for client consumption was estimated to be greater than 290 million units in 2025, marking two consecutive years of growth [23] - Demand for traditional servers remains strong, with a focus on ramping available capacity to support the uptick in data center demand [9][24] Company Strategy and Development Direction - The company aims to capitalize on AI-driven trends by strengthening its client franchise and advancing its data center, AI accelerator, and ASIC strategies [6][12] - A focus on simplifying the organization and reducing bureaucracy to improve efficiency and accelerate decision-making has been emphasized [4][6] - The long-term ambition is to rebuild Intel as a compute platform of choice for the next era of AI-driven computing, supported by world-class engineering and a renewed culture of execution [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the significant growth opportunities presented by AI across all business lines, despite acknowledging supply constraints that limited growth [6][15] - The company is committed to improving yield and efficiency in manufacturing to better support customer demand [15][16] - Management anticipates a strong year of growth for DCAI in 2026, with expectations of improved supply beginning in Q2 [28][29] Other Important Information - The company has strengthened its balance sheet, ending 2025 with $37.4 billion in cash and short-term investments [21] - The completion of strategic partnerships and investments, including a $5 billion investment from NVIDIA, has bolstered the company's financial position [20][21] Q&A Session Summary Question: Supply constraints and yield improvements - Management indicated that improving yields and throughput are key drivers for increasing supply, with expectations for improvements in Q2 [34][35] Question: Gross margin expectations - Management noted that gross margin is expected to decline in Q1 due to lower revenue and the impact of new product introductions, but improvements are anticipated as supply increases [40][41] Question: Server prospects and market share - Management emphasized the importance of the data center and AI strategy, focusing on the introduction of new products like Diamond Rapids and Coral Rapids to capture market share [55][56] Question: External foundry revenue expectations - Management expects to begin seeing revenue from external foundry efforts in 2027, with significant customer engagement already underway [76][79]