Intel Q1 earnings likely to be 'fine' but questions remain whether PC bottom is in
Intel (NASDAQ:INTC) is slated to report first-quarter results on April 27 and while the semiconductor giant has talked up its nascent foundry business as its future, the present still depends on the PC space.
UBS analyst Timothy Arcuri recently said the company's first-quarter results should be "fine" despite the challenging broader environment for IT spending, but the longer-term looks to be more promising.
"We remain confident on the longer term manufacturing roadmap (as evidenced by the recent decision to put Clearwater Rapids on Intel 18a) and this is ultimately the key debate for the stock," Arcuri wrote.
A consensus of analysts estimate that Intel (INTC) will report a first-quarter loss of 14 cents per share on $11.13B in revenue.
Earlier this week, TF International Securities analyst Ming-Chi Kuo said Sapphire Rapids, which is expected to start mass shipments next quarter, is under pressure as the supply chain was told to cut orders for Intel's (INTC) latest server chip nearly 50% due to weak demand.
In a statement provided to Seeking Alpha, an Intel (INTC) spokesman did not directly refute Kuo's comments, but said the fourth-generation Xeon processors continue to see "strong" demand, with the highest level support from customers and partners in the Xeon family. 
Morgan Stanley Joseph Moore, who rates Intel (INTC) equal-weight, said the first-quarter is likely to be the "bottom for revenue," but that the focus will be on the trajectory of the rebound.
"It should not be controversial that 1q revenues (guided down over 20% q/q and down about 40% y/y) would reflect undershipping relative to end demand; we think that this is most notable in the PC segment, which is seeing a modest supply chain recovery (even though end demand remains weak)," Moore wrote in an investor note. 
Moore added that the company's position in the data center is harder to ascertain, given weakening demand and elevated inventory levels, especially in the cloud, as the company continues to lose share among the hyperscalers to AMD (AMD) and Nvidia (NVDA).
"While we recognize compelling valuation on sum of the parts or ev/sales approaches, we still find it hard to credit the company with a reversal of recent share losses as long as the manufacturing strategy remains bifurcated between the needs of the foundry business and optimizing CPUs," Moore explained.
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