Intel has just released its Q1 2023 numbers. As expected by most informed observers, the results plunge the company into the red. Intel has reported $2.8 billion in losses in the first quarter, the worst results in its history. Obviously, the fall of the PC market weighs a lot in this bad result… However, several signals encourage the executives to be optimistic.
Intel in the red: the worst results in the company’s history
When he returned to business in 2021, Pat Gelsinger had announced a radical transformation of the company that would bring tension, tears and sweat. On that point, we can say that he was served. But he had clearly announced the color and negotiated with the main partners, a period of tranquility allowing him to cross the storm without worrying about his short-term future. Intel’s strategy is ambitious from an industrial point of view: building new factories, catching up with its Taiwanese competitor and manufacturing for others. An ambition that requires massive investments while revenues are falling. However, even if these figures are catastrophic, they are still above market expectations. Thus, the Intel share has climbed and ends Thursday’s session up about 5%. The main reason is that Intel seems to have reached its low point.
The numbers do suggest that Intel has bottomed out, so the next few quarters will depend on tech company spending, Forrester analyst Glenn O’Donnell told Reuters. We’re betting on a gradual increase in that spending. While the next quarter should also show a significant loss, the rebound appears to be underway.
Intel has to fight on two fronts: on the one hand, the collapse of sales on the PC market, which represents almost half of its business, and on the other hand, competition that has passed it by in the server market. It is on this last front that Intel hopes to regain the advantage in the coming months with the arrival of new chips that we will obviously talk about here. Finally, without the strategic upheavals that began many months ago, Intel would be a spectator of Nvidia’s domination of the GPU market, of intensive computing linked to AI… If nothing is won, far from it, the blues have nevertheless given themselves the right to participate in the game.
