Intel Records Profits in Q2 2023 after Two Straight Quarters of Declines, INTC Stock Up 8%

After two consecutive quarters of losses, semiconductor corporation Intel Corporation (NASDAQ: INTC) has returned to profitability in Q2 2023. For the three months that ended on July 1st, the company exceeded analysts’ expectations in earnings for the first time in nine months. Before amassing profits in Q2, Intel saw its largest quarterly decline in Q1 2023. At the time, the semiconductor chip marker recorded a 133% annual reduction in its earnings per share. GAAP loss per share was $0.66, while non-GAAP per share was $0.04. Also, the company plunged from a net profit of $8.2 billion or $1.98 per share in the previous year to a net loss of $2.8 billion or 66 cents.

Intel in Q2 2023

Following the unimpressive financial results for the last quarter, Intel recorded 13 cents in adjusted earnings per share, exceeding the expected loss of 2 cents. Also, its net income for the period was $1.5 billion or 35 cents per share. Meanwhile, it pulled in a net loss of $454 million or 11 cents per share in the same quarter last year. Despite experiencing some rebound in Q1 2023, Intel said its quarterly revenue plunged 15% YoY from $15.3 billion to $12.9 billion, representing its sixth consecutive quarter of declining sales. Speaking to analysts on a call, CEO Pat Gelsinger noted that the chip maker still experiences “persistent weakness”. Gelsinger stated that the weakness spans all its business units through the end of 2023.

According to the CEO, the Q2 2023 losses will continue, and Intel is not recovering until Q4. The executive made a reference to the cause of the decline, mentioning the shift to AI. He explained that cloud companies now focus on graphics processors for AI instead of Intel’s central processors.

On the other hand, finance chief David Zinsner attributed the better-than-expected Q2 2023 earnings to some internal developments at Intel. The financial head noted that the company cut $3 billion in costs this year and slashed its dividends. Earlier in the year, the corporation revealed plans to save $10 billion per year by 2025, which includes headcounts reduction. Zinsner said:

“We have now exited nine lines of business since [Gelsinger] rejoined the company, with a combined annual savings of more than $1.7 billion.”

Moving forward from the Q2 2023 financial results, Intel is bullish on its Q3 performance. The company expects adjusted earnings per share of 20 cents on revenue of an average of $13.4 billion. Meanwhile, analysts predict a 16 cents per share on $13.23 billion in sales.

At press time, Intel is up over 8% to $37.34 in the after-hours trading session.