Intel (INTC) is expected to report a "slight beat" in its fiscal first-quarter results amid robust server central processing unit demand, RBC Capital Markets said in a note e-mailed Tuesday.
On Thursday, the chipmaker is likely to post adjusted per-share earnings and revenue above RBC's projections for breakeven and $12.20 billion, respectively, for the March quarter, according to the brokerage. The current consensus on FactSet is for non-GAAP EPS of $0.02 and sales of $12.42 billion.
"We expect a slight beat/raise driven by strong server CPU demand," RBC analyst Srini Pajjuri said. "(Personal computer) market also appears to be holding up for now."
First-quarter revenue in the company's data center and artificial intelligence segment is pegged at $4.3 billion, representing a 3% annual gain, with room for potential upside, according to RBC.
"While demand remains strong, management expected internal wafer supply constraints to be most acute in (the first quarter) which could limit near-term upside," Pajjuri wrote. "Recent media reports point to Intel raising prices which should help."
For the current quarter, RBC expects Intel to issue an outlook above Wall Street's estimates of $13.1 billion in revenue and adjusted EPS of $0.09, driven by server CPU demand and improving wafer supply.
The data center and AI business is projected to see sequential growth of 10% in the second quarter, with RBC seeing potential upside amid improving supply and healthy pricing. The brokerage expects server demand to continue to benefit from agentic AI and sees industry supply remaining "tight" through 2026, it said in the note.
RBC maintained its sector perform rating on Intel's stock with a $48 price target.
The company's shares were up 0.3% in Tuesday afternoon trade, bringing its year-to-gains to nearly 79%.
Last year, the US government agreed to invest $8.9 billion in Intel's common stock as part of a deal to secure a stake in the company. Separately, Nvidia (NVDA) agreed to inject $5 billion in Intel under a collaboration that aims to develop new data center and PC chips.
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