[News] Intel’s Third-Quarter Revenue Set for Largest Decline in Five Quarters

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According to a report from MoneyDJ, citing the Reuters, Intel’s share price has plummeted this year as the company falls behind in the AI race and faces substantial losses in its foundry business.

Intel is set to release its third quarter 2024 earnings report after the U.S. stock market closes on October 31. According to the report from the Reuters, Intel is expected to announce its largest quarterly revenue drop in five quarters, with Wall Street expecting an 8% decline in revenue to USD 13.02 billion, according to data from LSEG compiled as of Oct. 26.

The Reuters indicated that shareholders are now looking to CEO Pat Gelsinger for detailed plans to help the company navigate this crisis, as the company reports significant losses in its foundry business and struggles to capitalize on the generative AI-driven chip boom.

The report from the Reuters highlighted that Intel’s losses in its foundry business are substantial, driven by the high construction costs of fabs. The foundry’s operating loss for the third quarter is estimated to reach USD 2.55 billion, significantly impacting the company’s overall profit.

According to the report from the Reuters, based on estimates compiled by LSEG, Intel is expected to see a decline of more than 7 percentage points in its adjusted gross margin, dropping to 37.9%.

On the other hand, Intel’s revenue from producing chips for AI-powered PCs is also expected to see an annual decline of more than 6% in the third quarter, as its rival AMD expands its AI PC product lineup, according to the Reuters.

Furthermore, the report noted that Intel’s Data Center and AI business group is also losing market share to AMD, with third-quarter revenue expected to decline by 17%, marking ten consecutive quarters of annual declines.

While Intel still holds a significant share of the server CPU market, demand is increasingly shifting toward AI graphics processors, an area where the company has limited presence, as the report from the Reuters pointed out.

Since taking office in 2021, Gelsinger has aimed to restore Intel to its former glory. He made ambitious promises to bring chip manufacturing back to the U.S. and to compete with TSMC in the foundry market. However, according to MoneyDJ, the second-quarter financial report released in August revealed a significant loss of USD 2.8 billion in the foundry business. On that day, the stock price dropped by 26%, marking its worst single-day decline in 50 years.

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(Photo credit: Intel)