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Intel Earnings Alert: Can Chipmaker Defy Slumping Estimates?

HomeIntel Earnings Alert: Can Chipmaker Defy Slumping Estimates?

Intel Earnings Alert: Can Chipmaker Defy Slumping Estimates?

Intel Earnings Alert: Can Chipmaker Defy Slumping Estimates?

Intel's Impressive Comeback and Potential for Continued Outperformance

As the first quarter of 2025 comes to a close, investors are eagerly awaiting Intel Corporation's (INTC) earnings release on April 24. Despite a dismal performance last year, Intel has made an impressive comeback, outperforming its peers in the semiconductor industry. The company's resilience amidst market chaos triggered by trade and tariff fluctuations is a testament to its strong fundamentals.

Analyzing Intel's Fundamentals Ahead of Earnings Release

Intel's turnaround strategy under new CEO Lip-Bu Tan has been focused on developing advanced AI processors and third-party foundry businesses. This approach aims to recoup the technological edge lost to Taiwan Semiconductor Manufacturing (TSM), the world's largest contract chipmaker, and regain market share lost to rival Advanced Micro Devices (AMD). Investors will closely watch the company's progress in this area.

Positive Earnings Estimate Revisions and a Reasonable Chance of Beating Estimates

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) increases the chances of an earnings beat. Intel has an Earnings ESP of +400.00% and a Zacks Rank #3. The company's positive earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter is also noteworthy.

Substantial Year-Over-Year Earnings Decline Expected

However, the Zacks Consensus Estimate for the first quarter indicates a substantial year-over-year earnings decline of 94.4% and a revenue decline of 3.2%. Intel's earnings track record has been unimpressive, with a four-quarter average negative earnings surprise of 366.6%.

What Investors Should Watch

Investors will closely watch new CEO Lip-Bu Tan's turnaround strategy for the struggling American chipmaker, seeking early indications of a reversal after years of strategic missteps. The company's ability to execute its plan and regain market share lost to rival AMD will be crucial in determining its future prospects.

ETFs with Substantial Allocation to Intel

Several ETFs having a substantial allocation to Intel are in focus ahead of its Q1 earnings, including REX FANG & Innovation Equity Premium Income ETF (FEPI), ProShares Nanotechnology ETF (TINY), Xtrackers Semiconductor Select Equity ETF (CHPS), Themes Generative Artificial Intelligence ETF (WISE), and VanEck Vectors Semiconductor ETF (SMH).

Understanding the Composition of Each ETF

  • REX FANG & Innovation Equity Premium Income ETF (FEPI) aims to provide exposure to leading tech firms within the equally weighted FANG & Innovation Index. It holds 32 stocks in its basket, with Intel making up for 6.4% share.
  • ProShares Nanotechnology ETF (TINY) invests in companies that help businesses use nanoscale technology to transform lives and revolutionize industries. It follows the Solactive Nanotechnology Index and holds 30 securities in its basket, with Intel occupying the fourth position at 5.3% share.
  • Xtrackers Semiconductor Select Equity ETF (CHPS) seeks to track the Solactive Semiconductor ESG Screened Index. It holds 53 stocks, with INTC being the second firm, accounting for a 5.1% share.
  • Themes Generative Artificial Intelligence ETF (WISE) seeks to track the Solactive Generative Artificial Intelligence Index, which identifies companies that derive their revenues from AI, Data Analytics & Big Data, Natural Language Processing, or Artificial Intelligence-Driven Services. It holds 41 stocks in its basket, with Intel occupying the sixth position at 4.7%.
  • VanEck Vectors Semiconductor ETF (SMH) offers exposure to companies involved in semiconductor production and equipment. It follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume.

Conclusion

As Intel prepares to report its first-quarter earnings, investors are optimistic about the company's prospects. With a reasonable chance of beating estimates and positive earnings estimate revisions, Intel has shed only 2.4% so far this year, outperforming the industry's average decline of 26.7%. As the world's largest chipmaker continues to execute its turnaround strategy, investors will be closely watching its progress in developing advanced AI processors and third-party foundry businesses. The company's ability to regain market share lost to rival AMD and recoup the technological edge lost to Taiwan Semiconductor Manufacturing (TSM) will be crucial in determining its future prospects.