Intel’s Q2 results show it’s not losing focus

Intel Corporation (NASDAQ: INTC) yesterday released its second quarter 2021 financial results. The digitization transformation and move to cloud services continue to accelerate, and a company like Intel sees that as an opportunity for even greater growth. Even with the current shortage of semiconductors, Intel is not losing its focus on both innovations and the implementation of new solutions.

The company’s previously appointed CEO in 2021, Pat Gelsinger, believes we are at the beginning of the semiconductor industry’s decade of continued growth and Intel is uniquely positioned to capitalize on that trend. As momentum builds, execution increases, the company’s products are chosen over top and flagship products. We are also seeing good results at other companies in the semiconductor industry, such as: Texas Instruments Incorporated (NASDAQ: TXN) and Advanced Micro Devices, Inc. (NASDAQ: AMD).

Results second quarter

Intel’s second quarter results are positive and evidence that momentum is building, as Gelsinger points out. Second quarter GAAP revenue was $19.6 billion, significantly ahead of the $17.8 billion projected, and there was no change when looking back year over year.

However, non-GAAP revenue was $18.5 billion, ahead of April’s forecast of $700 million, up 2% from the prior year. Intel’s Data Center Group (DCG) generated $6.5 billion, compared to the expected $5.9 billion. Client computing generated projected revenues of 9.95 billion, while actual revenues were 10.1 billion. GAAP EPS was $1.24, while non-GAAP EPS was $1.28, which also beat April’s forecast of $1.07.

The good trend in the semiconductor industry

Another chipmaker, Dallas-based Texas Instruments, also reported second-quarter profit that beat expectations. These good results were due to revenue growth and an increase in profit. Analysts expected revenue of $4.36 billion, and the company managed to generate $4.58 billion. That’s a 41% increase in sales if you look year over year. Expected earnings per share were $2.05, while analysts were expecting $1.83. However, sales guidance for the current quarter was below investor’s wishes, so the share price plummeted after the news.

Outlook

As revenue, earnings per share and gross margin exceeded Q2 guidance, Intel raised its full-year expectations for 2021. So projected GAAP revenue is $77.6 billion and non-GAAP revenue is expected to increase. $73.5 billion (which is an increase of $1 billion), resulting in projected GAAP EPS of $4.09 and non-GAAP EPS of $4.80. Planned CAPEX is between $19 billion and $20 billion and free cash flow should be $11 billion, which is a $500 million increase from previous expectations. Gelsinger estimates that the semiconductor shortage will ease in the second half of the year, but it will take another one to two years for demand to be fully met.

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