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Intel Q3 Earnings Preview: Examining Restructuring Efforts and PC Competition

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Intel Q3 Earnings Preview: Examining Restructuring Efforts and PC Competition

Investors and traders eagerly await Intel’s upcoming Q3 earnings results, set to be announced on Thursday, October 26th, after the market closes. Analysts predict an EPS of $0.22 (-62.7% YoY) for the quarter, with revenues expected to reach $13.6 billion (-11.1% YoY).

While Intel is likely to surpass expectations in Q3, there are concerns that its performance for Q4 might align with or fall below expectations. This can be attributed to diminishing PC tailwinds, continued pressure on enterprise demand, and US restrictions on China shipments of Intel’s Habana Gaudi accelerators.

Notebook sales for September exceeded expectations, benefiting both Intel and AMD. This consistent outperformance raises questions about the competitive landscape, particularly with Arm Holdings entering the PC sector and the possibility of Nvidia and AMD adopting Arm architecture. Although Arm has traditionally been considered inferior to Intel’s x86, Apple has demonstrated the potential for robust Arm-based processors, according to Wedbush Securities analyst Matt Bryson.

Heightened competition from Arm has put pressure on Intel’s pricing, potentially impacting its Q3 performance, as noted by Mott Capital Management. In addition to evaluating market competition, investors will be closely monitoring Intel’s progress with its restructuring plan. The recent announcement of the spin-off of the Programmable Solutions Group (PSG) into a standalone operation reflects Intel’s ongoing efforts to streamline its business.

Stifel views this move as a positive step for Intel, signaling a commitment to simplifying its larger business. However, UFD Capital maintains a more cautious outlook, highlighting the substantial amount of work that still needs to be done by the company.

Over the past two years, Intel has beaten EPS estimates 75% of the time and outperformed revenue estimates 50% of the time. In the last three months, EPS estimates have seen 26 upward revisions and 6 downward revisions, while revenue estimates have seen 28 upward revisions and 2 downward revisions.

Despite the potential challenges ahead, Intel’s Q3 earnings report will provide valuable insights into the company’s performance, setting the stage for further analysis and decision-making among investors and traders.