Here's a deeper than usual look at how Chipzilla fits into the current ecosystem from MarketWatch:
Data-center sales slow down, and 5G buildout that is helping other chip firms won’t boost Intel for a while
Intel Corp. stopped any talk of a chip rebound Thursday, and signaled that the cloud boom that sustained the chip giant has reached a pause at best, and an end at worst.Also at MarketWatch, the nuts and bolts report:
Intel INTC, -6.29% INTC, -6.29% reported fourth-quarter revenue of $18.66 billion Thursday afternoon, slightly below its forecast of about $19 billion. Of more concern was Intel’s first-quarter forecast, which projected no growth in revenue and earnings from the prior year, citing macroeconomic concerns, especially in China, and the current glut of memory chips in the market. Shares dove 7.1% in the extended session after the report.
The most worrisome aspect of Intel’s report and forecast was a serious decline in cloud-sales growth. Cloud computing has led to a boom in construction of data centers, benefiting a host of companies. For Intel, it has meant huge growth in sales of server chips: data-center revenue grew 24%, 27% and 26%, respectively, in the first three quarters of 2018.
Yet in Thursday’s report, Intel reported 9% growth, below expectations, and guidance for a low-single-digits decline in the current quarter. That should be a huge, blaring warning to tech investors that the cloud boom could be coming to an end, as other signs have pointed toward.
Executives attempted to deflect any concerns by saying that it was a normal cycle of companies buying chips, and then putting them into use before buying more, with promises of a rebound in the second half of the year. While guiding for a first-quarter decline in server sales, the company still projected mid-single-digits growth in that segment for the full year.
“The signals we get from our customers is a period of build for compute is going to shift now to a period of consumption, and that started in the second half of the fourth quarter and we expect that to continue through the first half of the year,” said Navin Shenoy, executive vice president and general manager of Intel’s data-center group, on the company’s call with analysts. “Over the medium- to long-term, the cloud business is going to continue to grow. There’s no doubt about that.” ....
Intel stock drops after earnings show weak outlook, revenue miss
And the big day the rest of the group had on Thursday:
Chip stocks rally for rare one-day 5% gain on strong earnings reports
Here are our posts on yesterday's action:
Watch Out Nvidia, Xilinx Is Performing (reports, beats, pops) XLNX; NVDA
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