INTC Beats Q1 Earnings Estimates Despite Flat Revenues Y/Y

Intel Corporation INTC reported relatively healthy first-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. Despite solid traction from an accelerated ramp-up of artificial intelligence (AI) PCs, initiatives to drive operational efficiency and agility and accelerate profitable growth significantly affected margins. 

Intel has made significant strides in its cost-cutting plan to rebuild a sustainable growth engine. However, despite better-than-expected quarterly results, shares were down in after-market trading owing to a soft outlook for the second quarter of 2025.

Net Income

The company incurred a GAAP loss of $821 million or a loss of 19 cents per share compared with a net loss of $381 million or a loss of 9 cents per share in the year-ago quarter. The significant decline was primarily due to the higher cost of sales and income tax provision. 

Excluding non-recurring items, non-GAAP earnings in the reported quarter were $580 million or 13 cents per share compared with $759 million or 18 cents per share a year ago. The bottom line surpassed the Zacks Consensus Estimate by 12 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues

GAAP revenues in the reported quarter remained almost flat year over year at $12.67 billion. The quarterly revenues were near the higher end of the guided range and beat the consensus estimate of $12.32 billion. The company witnessed healthy growth momentum in the Intel 18A process node and remains poised to launch the first Panther Lake stock-keeping unit by year-end. Management envisions robust growth opportunities with a strong product roadmap and semiconductor ecosystem, likely setting it apart from the competition.

Segment Performance

Client Computing Group (CCG) revenues decreased 8% year over year to $7.63 billion as customers reduced inventory levels owing to macroeconomic headwinds. However, Intel witnessed healthy traction in AI PCs that have taken the market by storm and remains firmly on track to ship more than 100 million by 2025. Panther Lake – the chip based on Intel 18A and the architectural successor to the well-received Lunar Lake – is slated to be launched in the second half of 2025, while Clearwater Forest – the first Intel 18A server product – is likely to be unveiled in the first half of 2026. 

Datacenter and AI Group (DCAI) revenues improved 8% year over year to $4.13 billion, driven by a solid demand for host CPUs for AI servers and storage compute.

During the quarter, Intel restructured its operating segments to integrate the Network and Edge Group (NEX) into CCG and DCAI. While total Intel Products revenues were down 3% to $11.76 billion, Intel Foundry revenues increased to $4.67 billion from $4.36 billion. All Other revenues, which include Altera, Mobileye and Other businesses, were $103 million.

Other Operating Details

Non-GAAP gross margin declined to 39.2% from 45.1% a year ago, while non-GAAP operating margin was down from 5.7% to 5.4%. Margins were significantly hurt by impairment charges and restructuring costs for a structural and operating realignment across the company. These included significant reductions in headcount, operating expenses and capital expenditures. The company has reduced its capital expenditures and is focusing on simplifying parts of its portfolio to unlock efficiencies and create value.

Cash Flow & Liquidity

As of March 31, 2025, Intel had cash and cash equivalents of $8.95 billion with $44.91 billion of long-term debt. In the first quarter of 2025, Intel generated $813 million of cash from operating activities against a cash utilization of $1.22 billion a year ago.

Outlook

For the second quarter of 2025, Intel expects GAAP revenues to be within $11.2-$12.4 billion. Non-GAAP gross margin is likely to be 36.5%. Non-GAAP earnings are expected to be break-even per share.

Zacks Rank

Intel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release first-quarter 2025 earnings on May 6. The Zacks Consensus Estimate for earnings is pegged at 59 cents per share, suggesting a growth of 18% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 14.4%. Arista delivered an average earnings surprise of 12.9% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating a decline of 3.7% from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 6.1%. Akamai delivered an average earnings surprise of 3.4% in the last four reported quarters.

Pinterest, Inc. PINS is set to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, implying growth of 25% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 31.7%. Pinterest delivered an average earnings surprise of 13.2% in the last four reported quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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