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Tag: Intel Corp.

  • AMD revenue drops 9% as PC chip sales decline sharply

    AMD revenue drops 9% as PC chip sales decline sharply

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    AMD Chair and CEO Dr. Lisa Su delivers a keynote address at CES 2023 at The Venetian Las Vegas on January 04, 2023 in Las Vegas, Nevada.

    David Becker | Getty Images

    AMD reported better-than-expected revenue and earnings for the first quarter, but the stock dropped 6% in extended trading on Tuesday after the chipmaker issued guidance for the current period that trailed analysts’ estimates.

    Here’s how the company did versus Refinitiv consensus estimates for the quarter ended in December:

    • EPS: 60 cents per share adjusted vs. 56 cents per share expected
    • Revenue: $5.35 billion vs. $5.3 billion expected

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    AMD said it expected about $5.3 billion in sales in the current quarter, versus Wall Street estimates of $5.48 billion. AMD CEO Lisa Su said in a statement that the company sees “growth in the second half of the year as the PC and server markets strengthen.”

    The company’s net loss swung to $139 million, or 9 cents per share, from a net income of $786 million, or 56 cents per share, during the year-earlier period. AMD excludes certain losses on investments and acquisition-related costs from its earnings.

    Revenue dropped 9% from $5.89 billion a year earlier.

    The biggest decline came in AMD’s client group, which includes sales from PC processors. AMD reported $739 million in sales in the category, a 65% decrease from $2.1 billion in sales during the same period last year.

    AMD’s report comes as the PC industry is in a deep slump, with shipments dropping 30% in the first quarter, according to IDC. Last week, Intel, AMD’s primary competitor in the PC and server chip markets, reported that its overall sales declined 36%.

    “We believe the first quarter was the bottom for our client processor business,” Su said.

    AMD’s data center segment sales edged up to $1.295 billion from $1.293 billion during the year-earlier period. The company said the category is likely to grow in the current quarter.

    “I would say from an overall market standpoint, I think enterprise will still be mixed, with the notion that we expect some improvement. Depends a little on the macro situation,” Su said.

    Sales in its embedded segment of less powerful chips for networking soared to $1.56 billion from $595 million year over year, partially due to additional revenue from the company’s purchase of Xilinx.

    AMD’s gaming segment, which includes graphics processors for PCs as well as chips for consoles like Sony PlayStation 5, reported $1.76 billion in sales, down slightly from $1.88 billion last year.

    Correction: The $5.3 billion revenue expectation was misstated in an earlier version.

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  • Intel tops Wall Street estimates, CEO says data-center business is improving

    Intel tops Wall Street estimates, CEO says data-center business is improving

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    A previous version of this article included an inaccurate number for Intel’s second-quarter profit forecast. It has been updated.

    Intel Corp. shares surged in the extended session Thursday, swinging from an initial loss after the chip maker topped Wall Street estimates for the quarter, and Chief Executive Pat Gelsinger assured analysts that the company’s data-center business was improving.

    Intel…

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  • Investor Dan Niles likes these tech stocks heading into the second quarter

    Investor Dan Niles likes these tech stocks heading into the second quarter

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  • Intel co-founder, philanthropist Gordon Moore dies at 94

    Intel co-founder, philanthropist Gordon Moore dies at 94

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    SAN FRANCISCO (AP) — Gordon Moore, the Intel Corp. co-founder who set the breakneck pace of progress in the digital age with a simple 1965 prediction of how quickly engineers would boost the capacity of computer chips, has died. He was 94.

    Moore died Friday at his home in Hawaii, according to Intel and the Gordon and Betty Moore Foundation.

    Moore, who held a Ph.D. in chemistry and physics, made his famous observation — now known as “Moore’s Law” — three years before he helped start Intel in 1968. It appeared among a number of articles about the future written for the now-defunct Electronics magazine by experts in various fields.

    The prediction, which Moore said he plotted out on graph paper based on what had been happening with chips at the time, said the capacity and complexity of integrated circuits would double every year.

    Strictly speaking, Moore’s observation referred to the doubling of transistors on a semiconductor. But over the years, it has been applied to hard drives, computer monitors and other electronic devices, holding that roughly every 18 months a new generation of products makes their predecessors obsolete.

    It became a standard for the tech industry’s progress and innovation.

    “It’s the human spirit. It’s what made Silicon Valley,” Carver Mead, a retired California Institute of Technology computer scientist who coined the term “Moore’s Law” in the early 1970s, said in 2005. “It’s the real thing.”

    Moore later became known for his philanthropy when he and his wife established the Gordon and Betty Moore Foundation, which focuses on environmental conservation, science, patient care and projects in the San Francisco Bay area. It has donated more than $5.1 billion to charitable causes since its founding in 2000.

    “Those of us who have met and worked with Gordon will forever be inspired by his wisdom, humility and generosity,” foundation president Harvey Fineberg said in a statement.

    Intel Chairman Frank Yeary called Moore a brilliant scientist and a leading American entrepreneur.

    “It is impossible to imagine the world we live in today, with computing so essential to our lives, without the contributions of Gordon Moore,” he said.

    In his book “Moore’s Law: The Life of Gordon Moore, Silicon Valley’s Quiet Revolutionary,” author David Brock called him “the most important thinker and doer in the story of silicon electronics.”

    Moore was born in San Francisco on Jan. 3, 1929, and grew up in the tiny nearby coastal town of Pescadero. As a boy, he took a liking to chemistry sets. He attended San Jose State University, then transferred to the University of California, Berkeley, where he graduated with a degree in chemistry.

    After getting his Ph.D. from the California Institute of Technology in 1954, he worked briefly as a researcher at Johns Hopkins University.

    His entry into microchips began when he went to work for William Shockley, who in 1956 shared the Nobel Prize for physics for his work inventing the transistor. Less than two years later, Moore and seven colleagues left Shockley Semiconductor Laboratory after growing tired of its namesake’s management practices.

    The defection by the “traitorous eight,” as the group came to be called, planted the seeds for Silicon Valley’s renegade culture, in which engineers who disagreed with their colleagues didn’t hesitate to become competitors.

    The Shockley defectors in 1957 created Fairchild Semiconductor, which became one of the first companies to manufacture the integrated circuit, a refinement of the transistor.

    Fairchild supplied the chips that went into the first computers that astronauts used aboard spacecraft.

    In 1968, Moore and Robert Noyce, one of the eight engineers who left Shockley, again struck out on their own. With $500,000 of their own money and the backing of venture capitalist Arthur Rock, they founded Intel, a name based on joining the words “integrated” and “electronics.”

    Moore became Intel’s chief executive in 1975. His tenure as CEO ended in 1987, thought he remained chairman for another 10 years. He was chairman emeritus from 1997 to 2006.

    He received the National Medal of Technology from President George H.W. Bush in 1990 and the Presidential Medal of Freedom from President George W. Bush in 2002.

    Despite his wealth and acclaim, Moore remained known for his modesty. In 2005, he referred to Moore’s Law as “a lucky guess that got a lot more publicity than it deserved.”

    He is survived by his wife of 50 years, Betty, sons Kenneth and Steven, and four grandchildren.

    ___

    This story corrects the name of California Institute of Technology.

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  • Intel co-founder Gordon Moore, author of ‘Moore’s Law’ that helped drive computer revolution, dies at 94 | CNN Business

    Intel co-founder Gordon Moore, author of ‘Moore’s Law’ that helped drive computer revolution, dies at 94 | CNN Business

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    Intel co-founder Gordon Moore, a pioneer in the semiconductor industry whose “Moore’s Law” predicted a steady rise in computing power for decades, died Friday at the age of 94, the company announced.

    Intel

    (INTC)     and Moore’s family philanthropic foundation said he died surrounded by family at his home in Hawaii.

    Co-launching Intel in 1968, Moore was the rolled-up-sleeves engineer within a triumvirate of technology luminaries that eventually put “Intel Inside” processors in more than 80% of the world’s personal computers.

    In an article he wrote in 1965, Moore observed that, thanks to improvements in technology, the number of transistors on microchips had roughly doubled every year since integrated circuits were invented a few years before.

    His prediction that the trend would continue became known as “Moore’s Law” and, later amended to every two years, it helped push Intel and rival chipmakers to aggressively target their research and development resources to make sure that rule of thumb came true.

    “Integrated circuits will lead to such wonders as home computers – or at least terminals connected to a central computer – automatic controls for automobiles, and personal portable communications equipment,” Moore wrote in his paper, two decades before the PC revolution and more than 40 years before Apple launched the iPhone.

    After Moore’s article, chips became more efficient and less expensive at an exponential rate, helping drive much of the world’s technological progress for half a century and allowing the advent of not just personal computers, but the internet and Silicon Valley giants like Apple

    (AAPL)    , Facebook

    (FB)     and Google

    (GOOG)    .

    “It sure is nice to be at the right place at the right time,” Moore said in an interview around 2005. “I was very fortunate to get into the semiconductor industry in its infancy. And I had an opportunity to grow from the time where we couldn’t make a single silicon transistor to the time where we put 1.7 billion of them on one chip! It’s been a phenomenal ride.”

    In recent years, Intel rivals such as Nvidia

    (NVDA)     have contended that Moore’s Law no longer holds as improvements in chip manufacturing have slowed down.

    But despite manufacturing stumbles that have caused Intel to lose market share in recent years, current CEO Pat Gelsinger has said he believes Moore’s Law still holds as the company invests billions of dollars in a turnaround effort.

    Even though he predicted the PC movement, Moore told Forbes magazine that he did not buy a home computer himself until the late 1980s.

    A San Francisco native, Moore earned a Ph.D. in chemistry and physics in 1954 at the California Institute of Technology.

    He went to work at the Shockley Semiconductor Laboratory where he met future Intel cofounder Robert Noyce. Part of the “traitorous eight,” they departed in 1957 to launch Fairchild Semiconductor. In 1968, Moore and Noyce left Fairchild to start the memory chip company soon to be named Intel, an abbreviation of Integrated Electronics.

    Moore and Noyce’s first hire was another Fairchild colleague, Andy Grove, who would lead Intel through much of its explosive growth in the 1980s and 1990s.

    Moore described himself to Fortune magazine as an “accidental entrepreneur” who had no burning urge to start a company – but he, Noyce and Grove formed a powerhouse partnership.

    While Noyce had theories about how to solve chip engineering problems, Moore was the person who rolled up his sleeves and spent countless hours tweaking transistors and refining Noyce’s broad and sometimes ill-defined ideas, efforts that often paid off. Grove filled out the group as Intel’s operations and management expert.

    Moore’s obvious talent also inspired other engineers working for him, and, under his and Noyce’s leadership, Intel invented the microprocessors that would open the way to the personal computer revolution.

    He was executive president until 1975 although he and CEO Noyce considered themselves equals. From 1979 to 1987 Moore was chairman and CEO and he remained chairman until 1997.

    In 2023 Forbes magazine estimated his net worth at $7.2 billion.

    Moore was a longtime sport fisherman, pursuing his passion all over the world and in 2000 he and his wife, Betty, started a foundation that focused on environmental causes. The foundation, which took on projects such as protecting the Amazon River basin and salmon streams in the US, Canada and Russia, was funded by Moore’s donation of some $5 billion in Intel stock.

    He also gave hundreds of millions to his alma mater, the California Institute of Technology, to keep it at the forefront of technology and science, and backed the Search for Extraterrestrial Intelligence project known as SETI.

    Moore received a Medal of Freedom, the nation’s highest civilian honor, from President George W. Bush in 2002. He and his wife had two children.

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  • Time to buy the tech rally? Hedge fund manager Dan Niles and others reveal their top picks

    Time to buy the tech rally? Hedge fund manager Dan Niles and others reveal their top picks

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  • Meet the $10,000 Nvidia chip powering the race for A.I.

    Meet the $10,000 Nvidia chip powering the race for A.I.

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    Nvidia CEO Jensen Huang speaks during a press conference at The MGM during CES 2018 in Las Vegas on January 7, 2018.

    Mandel Ngan | AFP | Getty Images

    Software that can write passages of text or draw pictures that look like a human created them has kicked off a gold rush in the technology industry.

    Companies like Microsoft and Google are fighting to integrate cutting-edge AI into their search engines, as billion-dollar competitors such as OpenAI and Stable Diffusion race ahead and release their software to the public.

    Powering many of these applications is a roughly $10,000 chip that’s become one of the most critical tools in the artificial intelligence industry: The Nvidia A100.

    The A100 has become the “workhorse” for artificial intelligence professionals at the moment, said Nathan Benaich, an investor who publishes a newsletter and report covering the AI industry, including a partial list of supercomputers using A100s. Nvidia takes 95% of the market for graphics processors that can be used for machine learning, according to New Street Research.

    The A100 is ideally suited for the kind of machine learning models that power tools like ChatGPT, Bing AI, or Stable Diffusion. It’s able to perform many simple calculations simultaneously, which is important for training and using neural network models.

    The technology behind the A100 was initially used to render sophisticated 3D graphics in games. It’s often called a graphics processor, or GPU, but these days Nvidia’s A100 is configured and targeted at machine learning tasks and runs in data centers, not inside glowing gaming PCs.

    Big companies or startups working on software like chatbots and image generators require hundreds or thousands of Nvidia’s chips, and either purchase them on their own or secure access to the computers from a cloud provider.

    Hundreds of GPUs are required to train artificial intelligence models, like large language models. The chips need to be powerful enough to crunch terabytes of data quickly to recognize patterns. After that, GPUs like the A100 are also needed for “inference,” or using the model to generate text, make predictions, or identify objects inside photos.

    This means that AI companies need access to a lot of A100s. Some entrepreneurs in the space even see the number of A100s they have access to as a sign of progress.

    “A year ago we had 32 A100s,” Stability AI CEO Emad Mostaque wrote on Twitter in January. “Dream big and stack moar GPUs kids. Brrr.” Stability AI is the company that helped develop Stable Diffusion, an image generator that drew attention last fall, and reportedly has a valuation of over $1 billion.

    Now, Stability AI has access to over 5,400 A100 GPUs, according to one estimate from the State of AI report, which charts and tracks which companies and universities have the largest collection of A100 GPUs — although it doesn’t include cloud providers, which don’t publish their numbers publicly.

    Nvidia’s riding the A.I. train

    Nvidia stands to benefit from the AI hype cycle. During Wednesday’s fiscal fourth-quarter earnings report, although overall sales declined 21%, investors pushed the stock up about 14% on Thursday, mainly because the company’s AI chip business — reported as data centers — rose by 11% to more than $3.6 billion in sales during the quarter, showing continued growth.

    Nvidia shares are up 65% so far in 2023, outpacing the S&P 500 and other semiconductor stocks alike.

    Nvidia CEO Jensen Huang couldn’t stop talking about AI on a call with analysts on Wednesday, suggesting that the recent boom in artificial intelligence is at the center of the company’s strategy.

    “The activity around the AI infrastructure that we built, and the activity around inferencing using Hopper and Ampere to influence large language models has just gone through the roof in the last 60 days,” Huang said. “There’s no question that whatever our views are of this year as we enter the year has been fairly dramatically changed as a result of the last 60, 90 days.”

    Ampere is Nvidia’s code name for the A100 generation of chips. Hopper is the code name for the new generation, including H100, which recently started shipping.

    More computers needed

    Nvidia A100 processor

    Nvidia

    Compared to other kinds of software, like serving a webpage, which uses processing power occasionally in bursts for microseconds, machine learning tasks can take up the whole computer’s processing power, sometimes for hours or days.

    This means companies that find themselves with a hit AI product often need to acquire more GPUs to handle peak periods or improve their models.

    These GPUs aren’t cheap. In addition to a single A100 on a card that can be slotted into an existing server, many data centers use a system that includes eight A100 GPUs working together.

    This system, Nvidia’s DGX A100, has a suggested price of nearly $200,000, although it comes with the chips needed. On Wednesday, Nvidia said it would sell cloud access to DGX systems directly, which will likely reduce the entry cost for tinkerers and researchers.

    It’s easy to see how the cost of A100s can add up.

    For example, an estimate from New Street Research found that the OpenAI-based ChatGPT model inside Bing’s search could require 8 GPUs to deliver a response to a question in less than one second.

    At that rate, Microsoft would need over 20,000 8-GPU servers just to deploy the model in Bing to everyone, suggesting Microsoft’s feature could cost $4 billion in infrastructure spending.

    “If you’re from Microsoft, and you want to scale that, at the scale of Bing, that’s maybe $4 billion. If you want to scale at the scale of Google, which serves 8 or 9 billion queries every day, you actually need to spend $80 billion on DGXs.” said Antoine Chakaivan, a technology analyst at New Street Research. “The numbers we came up with are huge. But they’re simply the reflection of the fact that every single user taking to such a large language model requires a massive supercomputer while they’re using it.”

    The latest version of Stable Diffusion, an image generator, was trained on 256 A100 GPUs, or 32 machines with 8 A100s each, according to information online posted by Stability AI, totaling 200,000 compute hours.

    At the market price, training the model alone cost $600,000, Stability AI CEO Mostaque said on Twitter, suggesting in a tweet exchange the price was unusually inexpensive compared to rivals. That doesn’t count the cost of “inference,” or deploying the model.

    Huang, Nvidia’s CEO, said in an interview with CNBC’s Katie Tarasov that the company’s products are actually inexpensive for the amount of computation that these kinds of models need.

    “We took what otherwise would be a $1 billion data center running CPUs, and we shrunk it down into a data center of $100 million,” Huang said. “Now, $100 million, when you put that in the cloud and shared by 100 companies, is almost nothing.”

    Huang said that Nvidia’s GPUs allow startups to train models for a much lower cost than if they used a traditional computer processor.

    “Now you could build something like a large language model, like a GPT, for something like $10, $20 million,” Huang said. “That’s really, really affordable.”

    New competition

    Nvidia isn’t the only company making GPUs for artificial intelligence uses. AMD and Intel have competing graphics processors, and big cloud companies like Google and Amazon are developing and deploying their own chips specially designed for AI workloads.

    Still, “AI hardware remains strongly consolidated to NVIDIA,” according to the State of AI compute report. As of December, more than 21,000 open-source AI papers said they used Nvidia chips.

    Most researchers included in the State of AI Compute Index used the V100, Nvidia’s chip that came out in 2017, but A100 grew fast in 2022 to be the third-most used Nvidia chip, just behind a $1500-or-less consumer graphics chip originally intended for gaming.

    The A100 also has the distinction of being one of only a few chips to have export controls placed on it because of national defense reasons. Last fall, Nvidia said in an SEC filing that the U.S. government imposed a license requirement barring the export of the A100 and the H100 to China, Hong Kong, and Russia.

    “The USG indicated that the new license requirement will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China and Russia,” Nvidia said in its filing. Nvidia previously said it adapted some of its chips for the Chinese market to comply with U.S. export restrictions.

    The fiercest competition for the A100 may be its successor. The A100 was first introduced in 2020, an eternity ago in chip cycles. The H100, introduced in 2022, is starting to be produced in volume — in fact, Nvidia recorded more revenue from H100 chips in the quarter ending in January than the A100, it said on Wednesday, although the H100 is more expensive per unit.

    The H100, Nvidia says, is the first one of its data center GPUs to be optimized for transformers, an increasingly important technique that many of the latest and top AI applications use. Nvidia said on Wednesday that it wants to make AI training over 1 million percent faster. That could mean that, eventually, AI companies wouldn’t need so many Nvidia chips.

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  • How to boost your portfolio income when companies cut dividends

    How to boost your portfolio income when companies cut dividends

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  • Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

    Tech stocks just finished a five-week rally — the longest stretch since market peak in November 2021

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    Tech stocks on display at the Nasdaq.

    Peter Kramer | CNBC

    The Nasdaq just wrapped up its fifth straight week of gains, jumping 3.3% over the last five days. It’s the longest weekly winning streak for the tech-laden index since a stretch that ended in November 2021. Coming off its worst year since 2008, the Nasdaq is up 15% to start 2023.

    The last time tech stocks enjoyed a rally this long, investors were gearing up for electric carmaker Rivian’s blockbuster IPO, the U.S. economy was closing out its strongest year for growth since 1984, and the Nasdaq was trading at a record.

    This time around, there’s far less champagne popping. Cost cuts have replaced growth on Wall Street’s checklist, and tech executives are being celebrated for efficiency over innovation. The IPO market is dead. Layoffs are abundant.

    Earnings reports were the story of the week, with results landing from many of the world’s most valuable tech companies. But the numbers, for the most part, weren’t good.

    Apple missed estimates for the first time since 2016, Facebook parent Meta recorded a third straight quarter of declining revenue, Google‘s core advertising business shrank, and Amazon closed out its weakest year for growth in its 25-year history as a public company.

    While investors had mixed reactions to the individual reports, all four stocks closed the week with solid gains, as did Microsoft, which reported earnings the prior week and issued lackluster guidance in projecting revenue growth this quarter of only about 3%.

    Cost control is king

    Meta was the top performer among the group this week, with the stock soaring 23%, its third-best week ever. In its earnings report Wednesday, revenue came in slightly above estimates, even with sales down year over year, and the first-quarter forecast was roughly in line with expectations.

    The key to the rally was CEO Mark Zuckerberg’s pronouncement in the earnings statement that 2023 would be the “Year of Efficiency” and his promise that “we’re focused on becoming a stronger and more nimble organization.”

    “That was really the game-changer,” Stephanie Link, chief investment strategist at Hightower Advisors, said in an interview Friday with CNBC’s “Squawk Box.”

    “The quarter itself was OK, but it was the cost-cutting that they finally got religion on, and that’s why I think Meta really took off,” she said.

    Zuckerberg acknowledged that the times are changing. From the year of its IPO in 2012 through 2021, the company grew between 22% and 58% a year. But in 2022 revenue fell 1%, and analysts expect growth of only 5% in 2023, according to Refinitiv.

    On the earnings call, Zuckerberg said he doesn’t expect declines to continue, “but I also don’t think it’s going to go back to the way it was before.” Meta announced in November the elimination of 11,000 jobs, or 13% of its workforce.

    Link said the reason Meta’s stock got such a big bounce after earnings was because “expectations were so low and the valuation was so compelling.” The stock lost almost two-thirds of its value last year, far more than its mega-cap peers.

    Navigating ‘a very difficult environment’

    Apple, which slid 27% last year, gained 6.2% this week despite reporting its steepest drop in revenue in seven years. CEO Tim Cook said results were hurt by a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. 

    “Apple is navigating what is, of course, a very difficult environment quite well overall,” Dan Flax, an analyst at Neuberger Berman, told “Squawk Box” on Friday. “As we move through the coming months and quarters, we’ll see a return to growth and the market will begin to discount that. We continue to like the name even in the face of these macro challenges.”

    Watch CNBC's full interview with Neuberger Berman's Dan Flax

    Amazon CEO Andy Jassy, who succeeded Jeff Bezos in mid-2021, took the unusual step of joining the earnings call with analysts Thursday after his company issued a weaker-than-expected forecast for the first quarter. In January, Amazon began layoffs, which are expected to result in the loss of more than 18,000 jobs.

    “Given this last quarter was the end of my first full year in this role and given some of the unusual parts in the economy and our business, I thought this might be a good one to join,” Jassy said on the call.

    Managing expenses has become a big theme for Amazon, which expanded rapidly during the pandemic and subsequently admitted that it hired too many people during that period.

    “We’re working really hard to streamline our costs,” Jassy said.

    Alphabet is also in downsizing mode. The company announced last month that it’s slashing 12,000 jobs. Its revenue miss for the fourth quarter included disappointing sales at YouTube from a pullback in ad spending and weakness in the cloud division as businesses tighten their belts.

    Ruth Porat, Alphabet’s finance chief, told CNBC’s Deirdre Bosa that the company is meaningfully slowing the pace of hiring in an effort to deliver long-term profitable growth.

    Alphabet shares ended the week up 5.4% even after giving up some of their gains during Friday’s sell-off. The stock is now up 19% for the year.

    Ruth Porat, Alphabet CFO, at the WEF in Davos, Switzerland on May 23rd, 2022. 

    Adam Galica | CNBC

    Should the Nasdaq continue its upward trend and notch a sixth week of gains, it would match the longest rally since a stretch that ended in January 2020, just before the Covid pandemic hit the U.S.

    Investors will now turn to earnings reports from smaller companies. Some of the names they’ll hear from next week include Pinterest, Robinhood, Affirm and Cloudflare.

    Another area in tech that flourished this week was the semiconductor space. Similar to the consumer tech companies, there wasn’t much by way of growth to excite Wall Street.

    AMD on Tuesday beat on sales and profit but guided analysts to a 10% year-over-year decline in revenue for the current quarter. Intel, AMD’s primary competitor, reported a disastrous quarter last week and projected a 40% decline in sales in the March quarter.

    Still, AMD jumped 14% for the week and Intel rose almost 8%. Texas Instruments and Nvidia also notched nice gains.

    The semiconductor industry is dealing with a glut of extra parts at PC and server makers and falling prices for components such as memory and central processors. But after a miserable year in 2022, the stocks are rebounding on signs that an easing of Federal Reserve rate increases and lightening inflation numbers will give the companies a boost later this year.

    WATCH: Watch CNBC’s full interview with Truist’s Youssef Squali

    Watch CNBC's full interview with Truist Securities' Youssef Squali

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  • Intel cuts pay, bonuses and other benefits while maintaining dividend

    Intel cuts pay, bonuses and other benefits while maintaining dividend

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    Intel Corp. continues to cut costs for everything except payments to investors.

    Intel
    INTC,
    +3.03%    ,
    which is already in the process of cutting what is believed to be thousands of jobs amid steep declines in profit and revenue, is reducing Chief Executive Pat Gelsinger’s base salary by 25% and trimming other salaries at a descending rate based on seniority, down to 5% cuts for midlevel positions, a person familiar with the matter told MarketWatch. While nonexempt workers and junior positions face no pay cuts, Intel is trimming its 401(k) contributions to 2.5% from 5% and will suspend merit raises and quarterly performance bonuses, the person said. Annual performance bonuses and stock grants will remain.

    In an emailed statement, an Intel spokesperson confirmed “several adjustments to our 2023 employee compensation and rewards programs.”

    “As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs,” the statement said. “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy. We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”

    Opinion: Intel just had its worst year since the dot-com bust, and it won’t get better anytime soon

    The move is similar to a 50% cut in stock compensation that Apple Inc.
    AAPL,
    +0.87%
    CEO Tim Cook requested and received, though Apple is one of the few large Silicon Valley tech companies that has not announced layoffs yet. Intel is targeting $3 billion in cost cuts in 2023 that include hundreds of layoffs that have already been disclosed in California, with many more expected.

    Intel has not touched its dividend, though, even as its free cash flow fell into the red during 2022 and is expected to be negative again this year. The chip maker paid out roughly $1.5 billion in dividends in the fourth quarter, completing $6 billion in annual payments, and maintained the same level of payments for the first quarter despite analysts questioning whether the company can afford it.

    For more: Intel stock’s dividend sticks out among chip makers

    “The board [and] management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners, and we are committed to maintaining a competitive dividend,” Chief Financial Officer David Zinsner said when asked directly about the dividend during Intel’s earnings call last week.

    Intel shares have declined 42.1% in the past 12 months, as the S&P 500
    SPX,
    +1.30%
    has dropped 10.3% and the Dow Jones Industrial Average
    DJIA,
    +0.36%
    — which counts Intel as one of its 30 components — has fallen 3.7%.

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  • Pro Picks: Watch all of Friday’s big stock calls on CNBC

    Pro Picks: Watch all of Friday’s big stock calls on CNBC

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    A recap of Friday's best stock picks on CNBC.

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  • Intel stock tumbles after brutal results

    Intel stock tumbles after brutal results

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    Pat Gelsinger, CEO, of Intel Corporation, testifies during the Senate Commerce, Science, and Transportation hearing on semiconductors titled Developing Next Generation Technology for Innovation, in Russell Senate Office Building on Wednesday, March 23, 2022.

    Tom Williams | CQ-Roll Call, Inc. | Getty Images

    Intel shares closed down 6.4% on Friday, a day after the company reported dismal quarterly and full-year results. The chipmaker’s tepid quarterly numbers, with a 32% year-over-year revenue decline and a net loss of $664 million for the fourth quarter of 2022, took both analysts and investors by surprise.

    Intel’s troubles, which include a surfeit of chips and weakening demand for factories pressing on its margin, are unlikely to abate soon, with the company guiding to an adjusted net loss of 15 cents per share for the upcoming quarter. Analysts did not mince words, cutting price targets almost across the board.

    “No words can portray or explain the historic collapse of Intel, with management attempting to blame a worst-ever PC inventory digestion dynamic and macro/China/enterprise to an over 20% q/q decline in sales,” Rosenblatt analyst Hans Mosesmann wrote in a note Thursday evening. Rosenblatt maintained its sell rating for Intel and lowered its price target from $20 to $17.

    Intel shares fell nearly 11% before the open Friday.

    It’s a significant test for Intel CEO Pat Gelsinger, who took the top job at the 54-year-old chip company in 2021. Factors outside Intel’s control have contributed to both the inventory and production issues, with a slowing PC market pressuring Intel’s margins and forcing retailers to “correct” their inventories, Gelsinger said in a call with analysts.

    “While we know this dynamic will reverse, predicting when is difficult,” the CEO told analysts. Intel’s stock is down more than 46% from its 52-week high.

    — CNBC’s Michael Bloom, Jordan Novet and Kif Leswing contributed to this report.

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  • Here’s what Intel’s terrible results mean for longtime rival and Club holding AMD

    Here’s what Intel’s terrible results mean for longtime rival and Club holding AMD

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    Intel Foundry Services will manufacture multiple chips for MediaTek for a range of smart edge devices, the two companies said on Monday.

    Fabian Bimmer | Reuters

    When Advanced Micro Devices (AMD) reports quarterly earnings next week, the Club holding’s results should not look nearly as bad as longtime rival Intel‘s (INTC) dismal numbers.

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  • Intel’s horrible quarter revealed an inventory glut and underused factories

    Intel’s horrible quarter revealed an inventory glut and underused factories

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    Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

    Jonathan Ernst | Reuters

    Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

    Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

    The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

    “Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

    In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

    Here are some of the most concerning bits from Intel’s earnings report and analyst call:

    Weak and uncertain guidance

    Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

    But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

    Read more about tech and crypto from CNBC Pro

    But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

    An inventory glut

    Management gave several reasons for the tough upcoming quarter, but one theme that came through was that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new chips.

    Both the PC and server markets have slowed after a two-year boom spurred by remote work and school during the pandemic. Now, PC sales have slowed and the computer makers have too many chips. Gelsinger is predicting PC sales during the year to be around 270 million to 295 million — a far cry from the “million units-a-day” he predicted in 2021.

    Now, Intel’s customers have to “digest” the chips they already have, or “correct” their inventories, and the company doesn’t know when this dynamic will shift back.

    “While we know this dynamic will reverse, predicting when is difficult,” Gelsinger told analysts.

    Dropoff in gross margin

    Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

    Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

    “We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

    The not-so-bad news: Dividend and self-driving

    Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

    If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

    Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

    Read more about electric vehicles from CNBC Pro

    Gelsinger was asked about this dynamic on Thursday.

    “I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

    There was at least one bright spot for Intel on Thursday.

    Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.

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  • Intel stock drops nearly 10% after earnings miss, execs predict quarterly loss as data-center market shrinks

    Intel stock drops nearly 10% after earnings miss, execs predict quarterly loss as data-center market shrinks

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    Intel Corp. shares dropped more than 9% in the extended session Thursday after the chip maker reported a big miss for the fourth quarter, forecast a loss for the first quarter, said the data-center market was contracting and that inventory digestion will gnaw at margins.

    Intel
    INTC,
    +1.31%
    executives forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39% for the current quarter. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.

    Chief Executive Pat Gelsinger told analysts on a conference call he would not provide a 2023 forecast. Gelsinger restricted the outlook to the current quarter, citing macro uncertainties, a digestion of PC inventory that was “difficult” to forecast and a contracting data-center market. In the fourth quarter, AI group sales dropped 33% to $4.3 billion, while the Street expected revenue of $4.08 billion.

    “We expect Q1 server consumption [total addressable market] to decline both sequentially and year-over-year at an accelerated rate, with first-half 2023 server consumption TAM down year-on-year before returning to growth in the second half,” Gelsinger said.

    Chief Financial Officer David Zinsner told analysts that the company will institute an accounting change in the first quarter, where Intel will extend the useful life of their machinery to eight years from a current five years. Gelsinger said that Intel was going to “squeeze” its effective capacity.

    While Zinsner would not give a full-year outlook, he did say that continued inventory digestion should be weighted to the first half of the year.

    Pressed on how Intel could get back to the 51% to 53% margins range he promised a year ago, Zinsner said a “significant inventory burn” on PC inventory would hit gross margins by 400 basis points in the first quarter. Gross margins for the fourth quarter dropped to 43.8% from 55.8% a year ago, and from 45.9% in the third quarter.

    Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.13 a share from a year ago.

    Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines.

    Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.

    Intel shares fell 9% in after-hours trading, after closing the regular session up 1.3% at $30.09. Other chip stocks also declined, including top rival Advanced Micro Devices Inc.
    AMD,
    +0.33%    ,
    which saw shares drop more than 3% in after-hours trading, and Nvidia Corp.
    NVDA,
    +2.48%    ,
    which declined 2%.

    Breaking down divisions: Client-computing sales fell 36% to $6.6 billion from a year ago; “network and edge” sales slipped 1% to $2.1 billion; and foundry services revenue rose 30% to $319 million.

    Analysts surveyed by FactSet expected revenue from client computing to come in at $7.36 billion; “network and edge” revenue of $2.23 billion; and foundry services revenue of $199.1 million.

    Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average 
    DJIA,
    +0.61%
     — which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index 
    SOX,
    +1.63%
     has dropped 13%, the S&P 500 index 
    SPX,
    +1.10%
     has declined 7%, and the tech-heavy Nasdaq Composite Index 
    COMP,
    +6.59%
     has dropped 15%.

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  • Intel stock drops after missing on earnings, predicting quarterly loss to start the new year

    Intel stock drops after missing on earnings, predicting quarterly loss to start the new year

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    Intel Corp. shares dropped in the extended session Thursday after the chip maker reported a big miss for the fourth quarter and forecast a loss for the first quarter.

    Intel
    INTC,
    +1.31%
    shares fell 6% in after-hours trading, after closing the regular session up 1.3% at $30.09.

    For the first quarter, Intel forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39%. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.

    “In 2023, we will continue to navigate the short-term challenges while striving to meet our long-term commitments, including delivering leadership products anchored on open and secure platforms, powered by at-scale manufacturing and supercharged by our incredible team,” said Pat Gelsinger, Intel’s chief executive, in a statement.

    Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.09 a share from a year ago.

    Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines. Gross margins dropped to 43.8% from 55.8% a year ago, and 45.9% in the third quarter.

    Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.

    Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average 
    DJIA,
    +0.61%
     — which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index 
    SOX,
    +1.63%
     has dropped 13%, the S&P 500 index 
    SPX,
    +1.10%
     has declined 7%, and the tech-heavy Nasdaq Composite Index 
    COMP,
    +1.76%
     has dropped 15%.

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  • Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

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    After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.

    In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:

    Microsoft Corp.

    Microsoft
    MSFT,
    +3.57%
    shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.

    First Take: Big Tech layoffs are not as big as they appear at first glance

    When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon.

    “Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”

    From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

    As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.

    Tesla Inc.

    Tesla
    TSLA,
    +4.91%
    stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.

    In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023

    For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles.

    While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025.

    Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low

    With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so.

    ‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board

    Intel Corp.

    Intel’s
    INTC,
    +2.81%
    questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
    AMD,
    +3.49%
    and Nvidia Corp.
    NVDA,
    +6.41%
    challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts.

    There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.

    Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over

    Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.

    This week in earnings

    Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”

    So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.

    Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.

    For the week ahead, 93 companies in the S&P 500 index
    SPX,
    +1.89%    ,
    and 12 of the 30 Dow Jones Industrial Average
    DJIA,
    +1.00%
    components, are set to report quarterly results.

    Mark your calendars! Here is MarketWatch’s full earnings calendar for the week

    Among the highlights: General Electric Co.
    GE,
    +1.07%
    reports Tuesday for the first time since splitting off its GE HealthCare Technologies
    GEHC,
    +4.43%
    business. 3M Co.
    MMM,
    +1.87%
    — which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing.

    And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
    UNP,
    +1.54%    ,
    whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
    CSX,
    +1.46%    ,
    which covers much of the East, reports Wednesday. Norfolk Southern Corp.
    NSC,
    +1.51%
    also reports Wednesday.

    Telecom giants Verizon Communications Inc.
    VZ,
    -0.15%    ,
    AT&T Inc.
    T,
    +1.53%
    and Comcast Corp.
    CMCSA,
    +3.22%
    report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
    AAPL,
    +1.92%
    iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic.

    The call to put on your calendar

    Southwest, post-meltdown: Southwest Airlines Co.
    LUV,
    +1.67%    ,
    which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.

    For more: Southwest Airlines turns to repairing its reputation after holiday meltdown

    The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.

    Scott Kirby, chief executive at United Airlines Holdings Inc.
    UAL,
    +2.25%    ,
    said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure.

    For more: United Airlines swings to profit despite ‘worst’ winter storm’

    “All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”

    American Airlines Group Inc.
    AAL,
    +0.37%    ,
    Alaska Air Group Inc.
    ALK,
    +0.85%
    and JetBlue Airways Corp.
    JBLU,
    +0.94%
    are also expected to report results Thursday morning, along with Southwest.

    The numbers to watch

    Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
    V,
    +1.77%    ,
    Mastercard Inc.
    MA,
    +2.27%    ,
    American Express Co.
    AXP,
    +3.23%
    and Capital One Financial Corp.
    COF,
    +6.40%
    prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills.

    Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
    DFS,
    +4.16%
    got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered.

    Larger banks, like JPMorgan Chase & Co.
    JPM,
    +0.24%    ,
    have also set aside more money to guard against credit losses.

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  • Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

    [ad_1]

    After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.

    In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:

    Microsoft Corp.

    Microsoft
    MSFT,
    +3.57%
    shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.

    First Take: Big Tech layoffs are not as big as they appear at first glance

    When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon.

    “Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”

    From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

    As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.

    Tesla Inc.

    Tesla
    TSLA,
    +4.91%
    stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.

    In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023

    For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles.

    While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025.

    Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low

    With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so.

    ‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board

    Intel Corp.

    Intel’s
    INTC,
    +2.81%
    questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
    AMD,
    +3.49%
    and Nvidia Corp.
    NVDA,
    +6.41%
    challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts.

    There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.

    Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over

    Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.

    This week in earnings

    Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”

    So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.

    Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.

    For the week ahead, 93 companies in the S&P 500 index
    SPX,
    +1.89%    ,
    and 12 of the 30 Dow Jones Industrial Average
    DJIA,
    +1.00%
    components, are set to report quarterly results.

    Mark your calendars! Here is MarketWatch’s full earnings calendar for the week

    Among the highlights: General Electric Co.
    GE,
    +1.07%
    reports Tuesday for the first time since splitting off its GE HealthCare Technologies
    GEHC,
    +4.43%
    business. 3M Co.
    MMM,
    +1.87%
    — which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing.

    And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
    UNP,
    +1.54%    ,
    whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
    CSX,
    +1.46%    ,
    which covers much of the East, reports Wednesday. Norfolk Southern Corp.
    NSC,
    +1.51%
    also reports Wednesday.

    Telecom giants Verizon Communications Inc.
    VZ,
    -0.15%    ,
    AT&T Inc.
    T,
    +1.53%
    and Comcast Corp.
    CMCSA,
    +3.22%
    report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
    AAPL,
    +1.92%
    iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic.

    The call to put on your calendar

    Southwest, post-meltdown: Southwest Airlines Co.
    LUV,
    +1.67%    ,
    which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.

    For more: Southwest Airlines turns to repairing its reputation after holiday meltdown

    The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.

    Scott Kirby, chief executive at United Airlines Holdings Inc.
    UAL,
    +2.25%    ,
    said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure.

    For more: United Airlines swings to profit despite ‘worst’ winter storm’

    “All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”

    American Airlines Group Inc.
    AAL,
    +0.37%    ,
    Alaska Air Group Inc.
    ALK,
    +0.85%
    and JetBlue Airways Corp.
    JBLU,
    +0.94%
    are also expected to report results Thursday morning, along with Southwest.

    The numbers to watch

    Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
    V,
    +1.77%    ,
    Mastercard Inc.
    MA,
    +2.27%    ,
    American Express Co.
    AXP,
    +3.23%
    and Capital One Financial Corp.
    COF,
    +6.40%
    prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills.

    Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
    DFS,
    +4.16%
    got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered.

    Larger banks, like JPMorgan Chase & Co.
    JPM,
    +0.24%    ,
    have also set aside more money to guard against credit losses.

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  • More than 55,000 global tech workers laid off in the first few weeks of 2023, says layoff tracking site

    More than 55,000 global tech workers laid off in the first few weeks of 2023, says layoff tracking site

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    More than 55,000 global technology sector employees have been laid off in the first few weeks of 2023, according to data compiled by the Layoffs.fyi website.

    The website’s tally of global tech layoffs has almost doubled from just over 25,000 on Tuesday.

    The data suggest 2023 is on pace to surpass 2022 for global tech redundancies, with 154 tech companies laying off 55,324 employees in the first few weeks of the year. Last year, 1,024 tech companies laid off 154,336 employees, according to Layoffs.fyi.

    Related: More than 25,000 global tech workers laid off in the first weeks of 2023, says layoff tracking site

    Layoffs.fyi was set up by San Francisco-based startup founder Roger Lee to track layoffs during the COVID-19 pandemic. Lee is the co-founder of Human Interest, a digital 401(k) provider for small businesses and Comprehensive, an employee compensation platform.

    Major U.S. tech companies are firmly in the layoffs spotlight. This week Google parent Alphabet Inc.
    GOOGL,
    +4.69%

    GOOG,
    +4.80%
    confirmed plans to lay off about 12,000 workers globally and Intel Corp.
    INTC,
    +1.62%
    said it is slashing hundreds of jobs in Silicon Valley.

    Microsoft Corp.
    MSFT,
    +3.19%
    confirmed plans to cut about 10,000 positions. The software maker’s layoffs did not come completely out of the blue. Earlier reports from Sky News and Bloomberg indicated that Microsoft was preparing to make cuts.

    See Now: Google joins Intel, Microsoft Amazon, Salesforce and other major companies laying off thousands of people

    In a blog post, Microsoft CEO Satya Nadella said that while the company is eliminating roles in some areas, the company will continue to hire in key strategic areas. The CEO did not specify which areas will see hiring but did describe advances in artificial intelligence as “the next major wave of computing.”

    Earlier this month Coinbase Global Inc.
    COIN,
    +8.56%
     announced 950 job cuts in an attempt to cut costs.

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  • Here are Wednesday’s biggest analyst calls: Apple, IBM, Amazon, Tesla, Exxon, Gap, Netflix & more

    Here are Wednesday’s biggest analyst calls: Apple, IBM, Amazon, Tesla, Exxon, Gap, Netflix & more

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