Intel Q2 2024 Earnings: A Horrendous Result With A Miss On Total Revenue, DCAI, Gross Margin, And EPS

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Intel has now announced its earnings for the second quarter of 2024, posting broadly negative results relative to the consensus expectations.

Intel (NASDAQ: INTC) Earnings Release for the Second Quarter of 2024

For the three months that ended on the 30th of June, 2024, Intel reported $12.833 billion in non-GAAP revenue, missing consensus expectations of $12.94 billion.

Here is the actual performance of Intel's business segments in Q2 2024:

The following chart compares the performance of Intel's two major segments - Data Center and AI (DCAI) and Client Computing Group (CCG) - with Wall Street's consensus expectations (sourced from here and here).

Of course, AI is the market's buzzword right now and Intel is trying to capture this thematic tailwind. In recent weeks, the company has introduced the Xeon 6 processors to handle data center-related tasks, the Gaudi 3 AI accelerator that is around 50 percent faster than NVIDIA's H100 GPUs at training generative AI models, and the new Lunar Lake chips that enable PCs to perform AI-related tasks.

Even so, given the fact that Intel's DCAI segment missed consensus revenue expectations in Q2 2024, it seems the company has yet to truly tap into the secular AI-focused tailwind.

During the quarter, the company generated $2.3 billion in cash from its operations. Its cash and cash equivalents and short-term investments now stand at around $29.273 billion.

Intel has reported Q2 2024 non-GAAP gross margin of 38.7 percent, which is down around 1.1 percent on an annual basis. This is all the more striking given the fact that Intel had guided to a non-GAAP gross margin of 43.5 percent just last quarter!

Additionally, the chipmaker has disclosed a GAAP net income of -$1,654 million vs. consensus expectations of -$448.50 million. On a non-GAAP basis, the company has earned a net income of $83 million.

Finally, Intel earned $0.02 in EPS (non-GAAP), missing consensus expectations of $0.10. Intel had previously guided to a non-GAAP EPS of $0.10 while announcing its earnings for the first quarter of 2024.

Here is the company's guidance for the third quarter of 2024:

Investors have reacted negatively to the company's latest earnings release, with the stock currently down over 10 percent in after-hours trading. The company not only failed to meet consensus expectations for its top-line and bottom-line metrics but also failed to deliver on the key DCAI segment. Moreover, its gross margin continues to worsen on a sequential basis, given the chipmaker's latest guidance.

Last year, Intel laid off around 5 percent of its workforce. Now, as per Bloomberg's reporting, the chipmaker is purportedly preparing to lay off between 1,000 and 9,000 employees, corresponding to between ~1 percent and 8 percent of its total workforce of around 110,000 employees.

Meanwhile, Intel's Foundry unit continues to benefit from the fierce tailwinds emanating out of the bipartisan consensus to re-shore chip manufacturing in the US. Intel expects the unit's ongoing expansion to result in cost savings of "more than $8 billion to $10 billion exiting 2025," which will allow the company to achieve a non-GAAP gross margin of around 60 percent and non-GAAP operating margins of around 40 percent by 2030.

Update: Intel intends to layoff 15,000 employees.

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