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Semiconductor giant Intel Corp $INTC announced better than expected second-quarter earnings after the market close Thursday. Intel responded strongly after it had been facing stiff competition from $AMD, Samsung and $NVDA in particular as their rivals chips excel in everything from gaming to cryptocurrencies usage.

Earnings: Excluding certain items, EPS of 72 cents vs. 68 cents EPS expected by Thomson Reuters. Revenue $14.76 billion, vs. $14.41 billion in revenue expected Thomson Reuters.

Reaction: Intel Corporation NASDAQ: INTC After-hours35.78 +0.81 (+2.32%)

  • Client Computing Group 12 percent revenue growth at $8.2 billion in revenue.
  • The Internet of Things Group up a hefty 26 percent year over year, at $720 million in revenue.
  • Data Center Group, which includes sales to public cloud infrastructure providers and also competes with AMD was up 9 percent at $4.4 billion.

Mobileye

Intel's pending buyout of autonomous driving systems specialist Mobileye $MBLY is nearing completion after clearing regulatory approval in several countries and approval from Mobileye's shareholders.

Intel's New Chips and AMD

On the competitive front both Intel and rival Advanced Micro Devices $AMD, who had a blowout quarter last two time around, have released several brand new processors in recent months. We have seen a migration to $INTC's upcoming Coffee Lake-S series of chips from the mainstream Core i5 and Core i7 desktop processors. This is competition for AMD's Ryzen and EPYC products that gamers have taken too.

On Tuesday $AMD reported earnings that topped expectations and gave strong guidance for the third quarter and the full year. In the after market the stock surged 7%. AMD said it now expects third-quarter revenue to increase about 15 percent year over year. That figure implies third-quarter revenue of about $1.50 billion, easily besting analyst projections for about $1.39 billion. 

Interesting point with the hot Bitcoin market is cryptocurrency miners use graphics cards from AMD and Nvidia $NVDA to mine new coins which can then be sold or held for future appreciation. AMD traditionally has the reputation as the mining go to at this point. AMD said they are still prioritizing its core gaming market while watch developments in digital currencies.

Samsung

Intel faces stiff competition from Korea's Samsung also, they reported record operating profit of 8.03 trillion Korean won ($7.21 billion) in its semiconductor division in Q217. Revenues were 17.58 trillion Korean won or $15.78 billion.The semiconductor accounts for over 57 percent of its entire earnings. 

Samsung overtook Intel in the first quarter of 2017 for the first time when it reported operating profit in its chip unit of 6.31 trillion Korean won ($5.66 billion). That easily beat Intel's $3.9 billion. Revenues were lower than Intel, highlighting Samsung's profit margin. This is because the NAND and DRAM chips Samsung produces, demand is over supply as data centers are growing along with phones and laptops. 

NVidia

NVidia position is well summed up by Jeffries July 10 Client note where they downgraded Intel from hold to underperform. Jefferies lowered it's 2018 price target to $29 from $38. 

Highlights

  • Intel has the "most to lose" in the "4th tectonic shift in computing."
  • "NVDA was the first to recognize and successfully invest in a HW/SW platform (GPU/CUDA) targeted specifically at parallel processing applications, and our field checks suggest it is years ahead of its competition."
  • "its Xeon/Xeon PHI platform is disadvantaged vs NVidia in emerging parallel workloads like deep neural networks"

 

Sources: Intel, ADM, Samsung, Reuters

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