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 Intel Q2 2024: Earnings and Revenues Below Expectations

Key Points:
- Q2 2024 Revenues and Net Income: Intel reported revenues of $12.83 billion, slightly below consensus expectations of $12.94 billion. GAAP net income was -$1.654 million, worse than expectations of -$448.5 million.
- Segment Performance: Despite the launches of the new Xeon 6 processors and Gaudi 3 AI accelerators, the DCAI (Data Center and AI) segment fell short of revenue expectations.
- EPS and Gross Margins: Non-GAAP EPS was $0.02, lower than expectations of $0.10. Non-GAAP gross margin fell to 38.7 percent, down from the 43.5 percent expected in the previous quarter.
- Layoffs and Future Strategies: Intel is planning additional layoffs of between 1,000 and 9,000 employees. The Foundry division is expected to generate significant savings by 2025.

Intel reported its financial results for the second quarter of 2024, showing a disappointing performance compared to market expectations. For the three months ended June 30, 2024, the company reported non-GAAP revenues of $12.83 billion, just below analysts’ estimates of $12.94 billion. GAAP net income was strongly negative, with a loss of $1.654 million, well below consensus expectations of -$448.5 million.

Despite efforts to capitalize on the wave of interest in artificial intelligence, Intel saw the DCAI segment fall short of expected results. Recently, the company introduced new processors such as the Xeon 6 for data centers and the Gaudi 3 AI accelerator, which promises 50 percent better performance than NVIDIA’s H100 GPUs in training generative AI models.

Non-GAAP gross margins for the quarter fell to 38.7 percent, down from the 43.5 percent expected in the previous quarter. Non-GAAP EPS of $0.02 also missed consensus expectations of $0.10, reflecting the company’s difficulties in keeping costs under control and improving profitability.

During the quarter, Intel generated $2.3 billion in cash from its operations, with cash and short-term investments totaling about $29.273 billion. However, the challenges do not stop there: Intel recently announced plans to lay off between 1,000 and 9,000 employees, representing about 1-8 percent of its total workforce of about 110,000 employees.

On the future strategy front, Intel’s Foundry division continues to benefit from support to bring chip manufacturing back to the United States. The company expects the expansion of this unit to result in cost savings of more than $8-10 billion by 2025, with the goal of achieving non-GAAP gross margin of about 60 percent and non-GAAP operating margins of about 40 percent by 2030.

Despite the disappointing results, Intel remains focused on completing its ambitious "IDM 2.0" plan, which aims to restore technology leadership in semiconductor manufacturing with the introduction of new process nodes such as the Intel 18A, scheduled for production in the first half of 2025.