Intel’s earnings beat expectations, but uncertainty looms over company future

Intel has posted better-than-expected earnings for the December quarter, but the company’s future remains uncertain as it grapples with leadership changes and intense competition in the AI chip market. While the results briefly lifted Intel’s stock by 3.8% in after-hours trading, investors are still questioning the company’s long-term strategy.

The company reported fourth-quarter revenue of $14.26 billion, beating Wall Street’s expectations of $13.81 billion. However, revenue was still down 7% compared to the previous year. Intel’s forecast for the current quarter was also weaker than expected, with projected revenue between $11.7 billion and $12.7 billion. This falls a little short of analysts’ $12.87 billion estimate.

Leadership uncertainty

Intel is currently without a permanent CEO after the abrupt departure of Pat Gelsinger last month. Two interim co-CEOs are running the show as the company searches for a new leader. This lack of clarity has left many investors uneasy, with analysts pointing out that stability at the top is crucial for guiding Intel through its transition.

“We’re focused and we know exactly what needs to be done,” said Co-interim CEO Michelle Johnston Holthaus, but the market remains skeptical.

AI struggles and competition with Nvidia

Once the undisputed leader in the semiconductor industry, Intel is now playing catch-up with rivals like Nvidia, which dominates the AI chip market. The company has even scrapped plans for its new graphics processing unit (GPU) project, Falcon Shores, admitting that it won’t be releasing any major AI products in the near future. Instead, Intel plans to use the Falcon Shores chip internally while shifting its focus to future data center AI products.

This is a tough spot for Intel, given that companies investing in AI are prioritizing specialized AI chips rather than traditional processors—the core of Intel’s business. Nvidia’s dominance in this space has made it difficult for Intel to gain traction, and its AI chip, Gaudi, has failed to generate significant revenue.

What’s next for Intel?

The biggest questions now are: Who will take over as CEO, and how will Intel reposition itself in the AI era? With strong competition from Nvidia and AMD, Intel needs to rethink its strategy if it wants to reclaim its leadership in the semiconductor industry.