"We expect Intel to guide below the normal seasonal range for 1Q23 revenue and EPS given continued weakness in the PC and data center end markets," Citi chips analyst Chris Danely wrote in a new client note on Tuesday. "We expect Intel to give full year guidance and talk about a 2H23 recovery but we do not believe it will happen until 2024 and our estimates reflect that."
Analysts are looking for first-quarter earnings of $0.26 on Intel and $1.81 a share for the full year, according to Yahoo Finance data. Reflecting the nervousness on Intel's initial 2023 outlook, analysts have marked down their estimate by 7 cents compared to just 30 days ago.
Danely maintained a Neutral rating on Intel into the release.
Close followers of the Intel story over the past year may not be totally shocked if the tech giant disappoints given that the PC market remains under severe pressure as consumers hold back on upgrading their pandemic-bought models.
Global shipments of PCs crashed 28.1% in the fourth quarter of 2022, according to IDC. The research outfit estimates global PC shipments will fall 5.6% in 2023.
The marketplace weakness led to another challenging quarter for Intel and its rivals in the third quarter.
In late October, Intel trimmed its full-year profit guidance to $1.95 a share from $2.30 previously. The company promised $10 billion in cost cuts through 2025 to offset the top-line sluggishness.
Danely added that Intel is likely to aggressively cut costs in 2023 to regain credibility with Wall Street — a factor that has helped propel the stock up more than 13% so far in 2023. But investors may stay locked in on market share loss for Intel versus AMD and how it stands to shape sales for the year.
"We believe there are more downsides to Consensus estimates given the PC and data center correction, in addition to market share loss," Danely wrote.