After-hours stock price fell more than 10%! Intel's Q1 guidance is far below expectations, and the road to glory is long.

Zhitong App learned that on Friday morning Beijing time, Intel, the world's largest computer processor manufacturer, announced its performance for the fourth quarter of 2023. The data shows that the company's Q4 revenue was $15.4 billion, a year-on-year increase of 10%, surpassing market expectations of $15.2 billion; adjusted earnings per share were $0.54, surpassing market expectations of $0.44.

In terms of business segments, data center sales were $4 billion, lower than market expectations of $4.08 billion; client computing, which is Intel's personal computer chip business, had sales of $8.84 billion, surpassing market expectations of $8.42 billion.

Looking ahead, Intel expects revenue for the first quarter of 2024 to be between $12.2 billion and $13.2 billion, with adjusted earnings per share of $0.13. In comparison, analysts forecast revenue of $14.25 billion and earnings per share of $0.34.

This outlook indicates that CEO Pat Gelsinger still has a long way to go to restore Intel's former glory. While the chip manufacturer's personal computer business is recovering, it is losing ground in the lucrative data center chip market. The company also faces challenges in the weak demand for autonomous driving programmable chips and components, as well as the early stages of outsourcing production.

In contrast, NVIDIA and AMD have always been stock market darlings, mainly because investors expect them to reap the greatest benefits from the surge in infrastructure spending related to artificial intelligence.

Intel also stated that it is looking for further ways to reduce expenses. CFO David Zinsner said in a statement, "We hope to further improve efficiency in 2024."

Intel expects its gross margin for the first quarter to reach 44.5%, down from the previous estimate of 45.5%.

This indicator reflects the production efficiency of Intel's multi-billion-dollar factory network. Prior to the issues that arose around 2019, Intel's profit margin was usually well above 60%.

Intel has stated that the personal computer market is recovering from excess inventory, and its largest customers are starting to reorder components. Gelsinger has stated that the total shipment of personal computers will rise to about 300 million units per year due to the demand for new machines that can better handle artificial intelligence software and services.

In the server field, Intel used to have over 99% market share, but the company is now facing more intense competition and a shift in spending patterns. Long-time competitor AMD has launched increasingly powerful chips and won favor from customers. Another concerning sign for Intel is that tech companies, including Amazon's AWS and Microsoft, are designing their own processors.

Currently, the frenzy of investment in artificial intelligence hardware has not brought much help to Intel. Most of the funds have flowed into the so-called accelerator chips produced by NVIDIA. These chips are better equipped to handle the massive amount of data required to develop artificial intelligence models.However, Intel also has its own accelerator called Gaudi. According to Gelsinger, the improved accelerator should help Intel in its competition.

He is also pushing Intel to enter the field of outsourced chip manufacturing, known as the foundry industry. As part of its expansion plans, the company is investing heavily in building a factory network around the world to meet the growing demand. So far, Intel has not publicly disclosed the names of any major customers. Some analysts doubt that Intel's foundry plans will yield returns for several years.

The separation of a division from Intel has also cast a shadow over its prospects. Earlier this month, autonomous driving technology manufacturer Mobileye Global announced full-year forecasts that were significantly below market expectations. Intel remains a major shareholder in this Israeli company.

As of the time of writing, Intel's stock fell 10.37% after hours, to $44.41. So far this month, the stock has fallen 1.4%, lagging behind the 7.1% increase in the Philadelphia Semiconductor Index.