Intel Q1 2023 earnings shows the company suffered its biggest loss yet

In its most recent earnings report, Intel revealed that its top-line and bottom-line metrics had largely surpassed consensus expectations for the first quarter of 2023. For the three months that ended on March 31st, 2023, Intel reported non-GAAP revenue of $11.7 billion.

Mobileye experienced the highest growth during the first quarter of 2023, while Data Centre and AI continued to lag behind with a growth of -39 percent. The business also outperformed consensus expectations and generated -$0.04 in non-GAAP EPS.

In the fourth quarter of 2022, Intel had given a non-GAAP EPS guidance of -$0.15.

Be aware that Intel reported a $2.8 billion GAAP loss for the first quarter of 2023. According to records dating back to 1993, the company has never disclosed a GAAP loss exceeding $687 million. The prior record was set in the fourth quarter of 2017, when the business disclosed a $687 million loss. Additionally, since 2009, Intel has not disclosed an adjusted quarterly loss.

The stock is currently down about 2% in after-hours trading as a result of the negative reaction from investors to Intel’s most recent earnings report. Even though the company did beat forecasts, the largest GAAP loss on record is undoubtedly nothing to celebrate.

According to IDC’s preliminary PC shipment data for the first quarter of 2023, the PC market is still struggling with low demand and high inventory levels as a result of the COVID-19 pandemic’s boomerang effect on consumers’ spending habits. On an annual basis, it is predicted that the total number of PC shipments in the first quarter of 2023 will have plummeted by a staggering 29%.

In terms of the product roadmap, the Sapphire Rapids datacenter-focused CPU has now begun shipping following a significant delay. The fifth-generation Emerald Rapids processor from Intel will now be released in Q4 2023, followed by Sierra Forest and Granite Rapids in 2024. The world’s largest semiconductor company is placing a large wager on data centres, forecasting an annualised growth rate for such CPUs in the low-20% range over the next five years.

But alarm bells are already going off. As an illustration, Microsoft, one of the major CSP customers for the chip, recently revised its H2 2023 orders for the Sapphire Rapids CPUs downward by between 50 and 70 percent, signalling a lower-than-anticipated demand for the processors.

In the second half of 2023, when orders from China are anticipated to pick up speed, analysts at Raymond James do anticipate a gradual recovery in the data centre segment. Given the boost from the Sapphire Rapids in Q2, should this scenario come to pass, Q1 2023 would end up being a rock bottom for the semiconductor giant.

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