Intel Corp. is set to report its second-quarter earnings results on Thursday, but investors likely will be more focused on the companys strategy for its future rather than its financial figures, according to some analysts.
The company has a new chief executive Lip-Bu Tan, who took over in March and has some difficult choices about its business. Intel has been largely left behind in the artificial-intelligence race, and its made extensive job cuts. A big question concerns what Intel will do with its foundry business and how its process technology is faring.
With that backdrop, Bernstein analysts led by Stacy Rasgon asked in a Monday note to clients: Do Intel numbers even matter at this point?
The chip makers personal-computer segment may be OK for now on the back of tariff dynamics, the analysts said, and they adjusted their revenue estimates to account for a bit stronger PCs in the current quarter. However, Wall Street seems convinced that Intel has benefited from a pull-forward of demand ahead of future tariff moves, and with that in mind, the Bernstein analysts doubt anyone is going to buy the stock for this potential in PCs.
Investors will be interested in what Intel has to say about the impact of tariffs on its central processing units, the analysts said. They added that headwinds to Intels structural business seem to be getting worse rather than better.
While ongoing layoffs and asset sales could help the company in the near-term, the broader questions around strategy and where they go from here seem much more important than whether they beat or miss the quarter, the analysts said.
For one, investors will likely be questioning Intels 18A chip manufacturing process, which it reportedly is considering not offering to external foundry customers, according to Reuters. The company spent billions of dollars developing the process under previous chief executive Pat Gelsinger. Not offering 18A and its variant 18A-P to external clients could end up in hundreds of millions, or even billions, of dollars in a write-off, Reuters reported.
See more: Heres the latest sign Intels turnaround wont be so easy, according to this analyst
Investors will also be watching for what Intel says about customer interest in its foundry business, whether new products can boost its stock performance, what Intels AI opportunity looks like and whether its layoffs are helping or harming the business in the long term, the Bernstein team said.
The stock still feels more event-driven at this point; we would continue to avoid it, the analysts said.
The Bernstein team slightly adjusted their estimate for Intels second-quarter revenue to $11.9 billion from $11.8 billion, though the new number is still below the $12 billion FactSet consensus. For the September quarter, the analysts now model $12.5 billion in revenue, which is down from their previous expectation for $12.6 billion. Analysts tracked by FactSet are looking for third-quarter revenue of $12.7 billion.
Intels stock rose 0.7% on Monday. Shares are up almost 9% since the companys last earnings report, but the S&P 500 is up nearly 15% in that span and the PHLX Semiconductor Index is up almost 38%.
The stock is tougher to short, though, the analysts said, because it sometimes spikes from news reports. Bernstein maintained its $21 price target for Intel.
