Microsoft, Alphabet, and More Earnings

Intel stock bulls will need to remain patient, with multiple quarters to go before the chip company gains traction for a bet-the-company push to compete with Taiwan Semiconductor Manufacturing and Samsung in the chip-manufacturing business.

Other big bets—such as chips for artificial-intelligence PCs and servers—are still at least a few quarters away from paying off.

Meanwhile, Intel’s first-quarter-earnings report, due after the close of trading Thursday, could show signs of improving demand from the PC segment.

For the quarter, Intel’s guidance calls for revenue of $12.2 billion to $13.2 billion, with an adjusted gross margin of 44.5%, and an adjusted profit of 13 cents a share. Street consensus estimates as tracked by FactSet call for sales of $12.8 billion, up 10% from a year ago, with earnings of 14 cents a share on an adjusted basis.

For the June quarter, the Street consensus calls for revenue of $13.7 billion and profits on an adjusted basis of 26 cents a share.

Citi analyst Christopher Danely, while maintaining a Neutral rating on Intel shares, recently launched an “upside catalyst watch” on the stock, which is down 32% year to date, largely due to recent disclosures of larger-than-expected losses on the company’s foundry business.

But Danely notes that March quarter notebook sales were up 44% from February, providing potential upside to consensus estimates for the quarter. Danley points out that about 31% of Intel’s revenue come from notebook processors.

BofA Global Research analyst Vivek Arya, who remains Neutral-rated on the stock, thinks Intel will get a near-term boost from a refresh cycle in PCs, aided by Microsoft’s pending termination of support for Windows 10, which should boost demand from enterprise buyers. But he remains concerned about AI compute budgets crowding out purchases of more-conventional servers.