Pre-Earnings Analysis: Intel Corporation, Advanced Micro Devices and Nvidia Corporation

This is not investment communication. The writer has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.

The earnings season is almost upon usa and we wanted to practise something different with our financial coverage this time around. We will be conducting a pre-release analysis and will be going through the significant factors that could cease up beingness material to the PC hardware industry. Our unique position equally a tech publication with leading expertise in the PC hardware sector allows united states to add significant value for investors of companies in the PC Hardware industry. As the senior editor of the hardware section here at Wccftech, I will be analyzing the three chip giants: Intel, AMD and Nvidia. As a foreword to our readers, you would do well to go along in mind the recent events that have afflicted the marketplace, including Brexit and the resulting turmoil and currency instability, too as potential headwinds to China's continued economic growth.

Intel (NASDAQ: INTC) pre-release earnings analysis

Let' start off with Intel Corporation (NASDAQ:INTC). The company has, in the past few years, been faced with the prospects of a shrinking PC market and difficulty making headway into shrinking its process nodes. Equally far as the PC manufacture is concerned, claims of the market "shrinking" or "dying" border on factual inaccuracy. A more accurate description of the trends of the pc market would exist a spectrum shift where growth is slowing. At that place are multiple reasons for that and the "PC is dying" is not ane of them. Intel Corporation has aggressively pushed forrard it processor technology at a lightning fast pace (Moore's Law) fifty-fifty in the absence of a competitor (AMD processors stopped being competitive in terms of performance quite a few years ago – something which could modify with Zen).

The consequence of this strategy have at present become quite articulate. As far as the PC gaming industry (and a significant portion of the general consumers) is concerned, Intel (NASDAQ:INTC) processors are years alee of their fourth dimension. A Sandy Bridge K-Serial CPU, now over 5 years old can hands keep up with even the almost demanding gaming titles of today (VR included). Equally such, the main problem with Intel processors is that, at that place is no killer app to really button them over the border and reinvigorate need.

Adding on to this is the fact that Intel has been battling with the laws of physics. It's becoming harder and harder to get shrink nodes. 14nm was difficult. 10nm will be fifty-fifty harder. Demand is now starting to concentrate on the college end side of things as the primary market becomes enthusiast in nature with the low end moving towards the mobile side. Things to continue in mind:

• Thankfully this year, Intel finally dropped its aggressive tick tock schema and cruel back to a more than economically sensible tick-tock-tock strategy. This will allow information technology to milk a procedure node ane more than fourth dimension with relatively depression price.
• Keep in mind yet, that Intel is undergoing restructuring and incurring one-off expenses (recognized under GAAP), so it is possible the company does non beat annotator expectations this time effectually, breaking a historical trend.
• Kaby Lake (the new iteration of the tick tock tock or compress-revise-revise schema) will be introduced.
• Intel will brainstorm unification of all its processor brands.
• The internet of things sectionalisation has been doing very well and the company will exist focusing on breaking into the auto industry as well.
• Intel (NASDAQ:INTC) and Mobileye have entered into a Joint Venture to supply BMW with the side by side generation EyeQ processor (for autonomous driving) and Intel Atom (for dashboard and infotainment) in 2022.

Intel Q2 2022 Outlook:

• Revenue: $thirteen.5 Billion, Plus/minus $500 Million.
• Non-GAAP gross margin per centum of 61%.
• R&D plus M&A spending approximately $five.i Billion
• Restructuring charges: ~ $1.two Billion, (Non-GAAP accuse: Zero)
• Equity Investments Gain: $150 One thousand thousand
• Depreciation: $ane.5 Billion
• Analysts Expectation: 53 Cents Profit Per Share

Nvidia (NASDAQ:NVDA) pre-release earnings assay

Nvidia Corporation (NASDAQ: NVDA)  is part of the GPU duopoly and a leading supplier of chips for car manufacturers. I of the things it's desperately trying to break into is the self driving portion of the car segment. Yes, yous read that right. One fact, that is frequently lost in shiny marketing textile, Is that for the most function, Nvidia is a  supplier of GPUs to auto manufacturers that handle the infotainment organisation while the 'autonomous' processing part is really done on a dedicated chip by a company chosen Mobileye.

The company has recently introduced the first generation of FinFET GPUs with GeForce branding. This is an upgrade a long time in the making since nosotros accept been stuck on 28nm for quite a few years. The performance of these GPUs exceeded expectations and have been met with unprecedented demand in the high end segment. It's worth pointing out that Wells Fargo has downgraded their expectation to underperform. It is possible that this could be based on outdated data since virtually of the info nigh the 1060 has not been publicly revealed yet. Some things to call up:

• Nvidia (NASDAQ: NVDA) introduced the GTX 1080 and GTX 1070 graphics cards which currently take no AMD equivalent cards for competition. The company has also increased the price of its reference cards at present called the Founder Editions.
• A GTX 1060 is in the works which could potentially be priced to undercut the RX 480 reward that AMD has in the mainstream market place. Latest rumors bespeak that a new GP106 based variant could be priced equally low as $149 MSRP. The cost of the GTX 1060 i $249 MSRP. The AMD equivalent RX 480 offers slightly amend performance at an MSRP of $199 for the 4 GB version and $229 for the 8 GB version.
• The company has also made strides in the mobile segment. The high end market place is currently completely Nvidia with no AMD counterparts since the company started introducing desktop level chips for notebooks.
• The automobile division remains one of the about bullish sectors of Nvidia Corp with strong footholds with near car manufacturers every bit far every bit powering the dashboard and infotainment arrangement is concerned, although this still remains a small piece of the overall revenue pie.
• Nvidia (NASDAQ: NVDA)'s car sectionalization Tegra fries have overtaken Mobileye in terms of MAC/due south (the relevant functioning metric ) only still haven't cleaved into the market withal due to the lack of an established ecosystem.
• In that location have been rumblings of a supply problem with Pascal GPUs but we take yet to find a credible source to back upwards the claim.

Nvidia Q2 2022 Outlook (Q2 FY17 )

• Revenue is expected to exist $ane.35 billion, plus or minus two percent.
• GAAP and non-GAAP gross margins are expected to exist 57.7 percent and 58.0 percent, respectively, plus or minus l basis points.
• GAAP operating expenses are expected to be approximately $500 meg. Non-GAAP operating expenses are expected to exist approximately $445 meg.
• GAAP and non-GAAP tax rates for the second quarter of fiscal 2022 are both expected to be twenty percent, plus or minus i percent.
• Majuscule expenditures are expected to exist approximately $30 million to $40 one thousand thousand
• Analysts Expectation: 37 Cents Earnings Per Share

Advanced Micro Devices (NASDAQ:AMD) pre-release earnings assay

AMD (NASDAQ: AMD) has been pretty active in the corporate side of things lately, with the HiAlgo acquisition coming just a few months later on their they announced their articulation venture with the Chinese company THATIC(Tianjin Haiguang Advanced Technology Investment Co., Ltd.), showing that the company is making several attempts to broaden its portfolio and turn the visitor effectually in one case and for all. AMD licensed loftier-performance processor and SoC engineering science to a newly-created Joint Venture information technology has formed with THATIC (Tianjin Haiguang Avant-garde Technology Investment Co., Ltd.) to develop SoCs tailored to the Chinese server market that will complement AMD's own offerings. The $293 million licensing understanding (out of which ~25 Million was forecast to be recognized this quarter) is a meaningful step in AMD'southward IP monetization strategy intended to accelerate the Company's growth and improve monetize its valuable avails. One caveat in this is the fact that payments volition exist dependent on certain milestones existence achieved.

"Our new licensing agreement is a great example of leveraging our strong IP portfolio to accelerate the adoption of our technologies more broadly," said Dr. Su. "The articulation venture with THATIC provides AMD with a differentiated arroyo to assist gain share in the fastest growing region of the server market."

AMD will as well be receiving $320 Meg (net of tax and other expenses) from the NFME Articulation Venture (ATMP) which will be lowering future capital expenditures of the company and increasing greenbacks and other equivalents to $950 One thousand thousand. This tin can help profitability in the time to come simply will not affect earnings per share direct.

Things accept started to expect skilful for AMD (NASDAQ: AMD) this year and the stock price has reflected this in the past few months. The introduction of Zen will however, be the start examination the company must pass. Everything depends on the good reception of Zen, the silicon valley behemothic has besides much invested in it for information technology not to succeed. Of course, AMD is currently under a mountain of debt (full debt at the stop of the quarter was over $2 billion, flat from the prior quarter) with a hefty chunk of that due in 2022 as you lot can see below and then it nonetheless has a long manner to go earlier it is out of treacherous waters.

• AMD recently released the RX 480 as well and while that wasn't able to offering whatever competition to the loftier end FinFET products from Nvidia it was supposed to target a new price betoken for mainstream gaming. This tin give AMD an unprecedented edge depending on how Nvidia prices its GTX 1060 GPU.
• Interestingly still, Nividia has decided to push button forward their GTX 1060 GPU which will compete directly with the RX 480 in its category – competing for the price point that was supposed to be the jewel in AMD'due south crown. Another thorn in an otherwise perfect launch is allegations of the RX 480 declining to meet PCI-East specifications. We will exist covering this particular incident in a separate mail service.
• AMD'due south (NASDAQ: AMD) Polaris GPUs are all set to offer mainstream performance at a budget toll.
• The arrival of Zen x86 processors have been causing meaning anticipation in the PC marketplace since they are expected to finally offer competitive performance to Intel counterparts (at the given price point)

AMD Q2 2022 Outlook

• Analysts Expectation: 8 Cents Loss Per Share
• Revenue to increase 15% sequentially (plus or minus iii%)
• Gross margin volition be 31%
• IP monetization of $25 1000000
• Non-GAAP operating expenses to be approx. $335 Million
• Interest expenses and others to be approximately $45 Million
• Cash and equivalent at $950 Million (upward from $716 Million final quarter).

Source: https://wccftech.com/pre-earnings-analysis-intel-amd-nvidia-q2-2016/

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