AI and IoT perform well in Intel’s record-breaking earnings call

Intel’s recent acquisition of Habana Labs has strenghtened its AI portfolio for the data centre. The company saw its data-centric business grow significantly in 2019.

On Thursday (23 January), Intel reported that Q4 revenue was up 8pc on 2018, with the company earning $20.21bn in the final stretch of 2019. With a strong end to 2019 secured, the company set an optimistic guidance for the year ahead, expecting

The Californian business expects Q1 revenue for 2020 to reach $19bn, which is an 18pc increase on Q1 2019. This is above consensus estimates of $17.25bn. Intel also expects per share (EPS) to hit $1.30 in the first quarter of the year.

The company has increased its quarterly dividend by 5pc to $0.33, with the dividend carrying a 3pc forward yield.

After the company announced the news, shares rose 5.6pc in after-hours trading, to $66.85. Intel’s success in the last quarter also helped shares of other chipmakers, such as AMD, Nvidia and Western Digital, who also saw share prices increase.

A record year for Intel

For the first time ever, Intel’s annual earnings hit $72bn, with the company expecting to reach $73.5bn in 2020. The company saw record growth in its data centre group (DCG) revenue, which hit the $23.5bn mark for the first time. Intel’s DCG grew 19pc year-on-year in the fourth quarter.

It was the second highest earning part of the business after client computing, which is the side of Intel’s business that manufactures for mobiles and PC. Client computing led revenue despite the ongoing manufacturing supply constraints that the company is dealing with. Over the course of 2019, Intel’s client computing business brought in $37.1bn, and in Q4 it grew 2pc to $10bn.

Internet of things was another big earner for the business, with this arm bringing in $3.8bn. The company was also helped by the increased adoption of advanced driver-assistance systems (ADAS).

In its earnings report, the company said: “Intel acquired Habana Labs in the fourth quarter, strengthening its artificial intelligence portfolio for the data centre. Internet of things group revenue was up 13pc on strength in retail and transportation. Mobileye achieved record revenue, up 31pc year-on-year on increasing ADAS adoption.”

Investing in the future

CEO Bob Swan said: “Several years ago, we began a transformation to reposition the company to take advantage of the data revolution that is reshaping computing… but our journey is just beginning.

“To reach our multiyear goals, we will continuously focus on three key priorities: accelerating growth, improving execution and deploying our capital for attractive returns.”

With the company bringing in $3.8bn in AI-based revenue, looks to be preparing itself for the future, in which the market opportunity for AI is expected to be worth $25bn by 2024.

Swan said: “We feel great about how we wrapped up the year with the best quarter in the company’s history. In 2020, we’ll do it again. We expect it to be another record year. And our ambitions have just never been greater.”

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