Intel’s
(INTC) fourth-quarter
results
were
modestly
ahead
of
our
expectations
but
provided
investors
with
a
soft
first-quarter
forecast,
with
stronger-than-usual
seasonal
headwinds
and
inventory
corrections
in
some
non-core
businesses.
With
Intel’s
stock
up
45%
in
the
past
three
months –
versus
a
15%
rise
in
the
Morningstar
Global
Markets
Index –
we
suspect
investors
were
seeking
a
brighter
outlook,
particularly
in
Intel’s
foundry
business
and
artificial
intelligence
(AI)
accelerator
pipeline.
We’re
not
too
stunned
to
see
shares
fall
as
much
as
10%
after
hours.
We
keep
our
fair
value
estimate
of
$40
(£31.58)
per
share
for
Intel,
and
still
do
not
see
an
attractive
margin
of
safety
for
investors.
Revenue
in
the
December
quarter
was
$15.4
billion,
up
9%
sequentially
and
10%
year
over
year,
and
above
the
midpoint
of
guidance
of
$15.1
billion.
Client
computing,
or
CCG,
performed
well
and
beat
management’s
expectations,
with
revenue
up
12%
sequentially
and
33.5%
year
over
year,
as
PC
demand
rebounded
from
the
severe
post-Covid
pause
seen
in
prior
quarters.
Revenue
for
the
data
center
and
AI
segment
was
up
4.5%
sequentially
but
down
7%
year-on-year.
Intel
is
still
facing
a
negative
wallet
share
shift
wherein
cloud
customers
are
heavily
investing
in
AI
accelerators
at
the
expense
of
traditional
server
processors.
Higher
sales
and
favourable
mix
and
pricing
enabled
Intel’s
adjusted
gross
margin
to
rise
to
48.8%,
up
300
basis
points
sequentially
and
solidly
ahead
of
guidance
of
46.5%.
In
the
March
quarter,
Intel
expects
revenue
to
fall
to
the
range
of
$12.2
billion-$13.2
billion,
which
at
the
midpoint
would
represent
8%
growth
year
over
year
but
an
18%
sequential
decline.
Lower
revenue
should
cause
the
adjusted
gross
margin
to
fall
to
44.5%.
Intel
expects
growth
both
sequentially
and
year
over
year
for
the
rest
of
2024.
But
we
don’t
view
this
as
a
high
bar,
as
both
we
and
the
market
assume
Intel
will
remain
on
the
road
to
recovery
in
the
long
term.
Key
Morningstar
Metrics
for
Intel
• Fair
Value
Estimate:
$40.00;
• Morningstar
Rating:
2
stars;
• Morningstar
Economic
Moat
Rating:
None;
• Morningstar
Uncertainty
Rating:
High.
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