Intel’s Q4 Outperforms—Will Jaguar Shores Secure Its AI Future?

Intel (Q4) Performance Review: Short-Term Gains, Long-Term Pressure Remains

After the market closed on Thursday (Eastern Time), Intel released its financial report for the fourth quarter and full fiscal year 2024. Although both revenue and earnings per share (EPS) exceeded market expectations, the overall performance trend still indicates structural challenges.

In Q4, the company achieved revenue of $14.26 billion, surpassing the market expectation of $13.81 billion. Adjusted EPS was $0.13, also higher than the expected $0.12. However, part of this growth was driven by early purchases due to concerns over potential tariff risks rather than fundamental business improvements.

For the full year, Intel reported total revenue of $53.1 billion, down 2% year-over-year and below market expectations. The company posted a net loss of $18.8 billion for fiscal year 2024, compared to a net profit of $1.7 billion in fiscal year 2023, reflecting ongoing profitability challenges.

Business Segment Performance: Short-Term Rebound in PC Business, Foundry Under Pressure

Client Computing (PC Processors): Q4 revenue reached $8.02 billion, down 9% year-over-year but slightly above the market expectation of $7.84 billion. Concerns over potential tariff hikes by Trump led some customers to make early purchases, providing a short-term boost to sales.
Data Center & AI: Revenue was $3.39 billion, down 3% year-over-year, roughly in line with expectations. Despite strong demand for AI chips, Intel’s competitiveness remains weaker than AMD and NVIDIA.
Network & Edge Computing: Revenue grew 10% year-over-year to $1.62 billion, exceeding the market expectation of $1.5 billion. This was one of the few segments that achieved growth.
Foundry Business: Revenue was $4.502 billion, down 13% year-over-year. As a key segment for Intel’s future transformation, its underperformance reflects competitive pressure in the market.
Other Businesses (including Mobileye, etc.): Revenue was $1.042 billion, down 20% year-over-year.

Government Subsidies and Manufacturing Investments

In Q4 2024, Intel received $7.86 billion in subsidies from the U.S. government to support its chip manufacturing expansion in the U.S. This funding will aid Intel’s advancement in 18A process technology, with mass production expected in the second half of 2025. However, in the short term, this investment will have limited contribution to profitability.

Market Outlook: Short-Term Pressure, AI Chip Strategy Faces Constraints

Despite exceeding expectations in Q4, Intel’s outlook for Q1 2025 was disappointing, with projected revenue between $11.7 billion and $12.7 billion, falling short of the market expectation of $12.87 billion. Management cited seasonal demand weakness, intensified competition, and uncertainty surrounding potential tariff policies as factors affecting short-term performance.

Regarding AI chip competition, Intel announced on Thursday that its Falcon Shores GPU for AI and HPC applications will not be released to the market and will only be used for internal testing. The company will shift focus to the development of its successor, codenamed Jaguar Shores. This decision leaves the troubled Gaudi 3 processor as Intel’s only viable AI solution for the next two years. Meanwhile, Intel is focusing on rack-scale solutions, which it sees as the only viable path to competing with AI leader NVIDIA. These adjustments highlight Intel’s ongoing struggles in AI and its continued lag behind NVIDIA and AMD.

Leadership Changes: CEO Selection as a Key Variable

Following the departure of former CEO Pat Gelsinger, Intel is currently led by interim co-CEOs, CFO David Zinsner and Product President Michelle Johnston Holthaus. The company laid off approximately 15,000 employees in 2023, and its stock price declined nearly 50% over the year. Gelsinger’s exit introduces uncertainty into Intel’s leadership, and the selection of his successor will directly impact the company’s strategic direction, including potential decisions on spinning off the foundry business and accelerating AI chip development.

During Thursday’s earnings call, Intel did not provide updates on its CEO search, only stating that the process is ongoing. Market analysts believe that the choice of Intel’s next CEO will have a profound impact on the company’s future strategy, particularly regarding the development of its foundry business, AI chip investments, and potential business restructuring. Intel plans to host the Intel Foundry Direct Connect event on April 29, where further insights into its future strategy may be provided.

Future Expectations: Continued Short-Term Volatility, Long-Term Competitiveness in Question

Following the earnings release, Intel’s stock rose over 3% in after-hours trading, but its year-to-date performance remained down by 1%, compared to a 3% gain in the S&P 500 over the same period. Over the past year, Intel’s stock has fallen by approximately 60%, reflecting market concerns over its long-term growth prospects.

Overall, while Intel’s Q4 results showed short-term positives, its core business continues to face multiple challenges, including market competition, technological upgrades, and leadership uncertainty. Until Intel demonstrates significant progress in AI and foundry businesses, its long-term growth potential remains uncertain.