A Tale of Two Chip Stocks: Intel, Texas Instruments Get the Ball Rolling for Semiconductor Earnings

January 25, 2022Updated: January 25, 2022

Intel Corporation and Texas Instruments Incorporated report quarterly results this week, marking the beginning of the big tech earnings season.

Texas Instruments is scheduled to report Tuesday after the close, and Intel will release its quarterly report the next day after the close.

Here are Rosenblatt Securities’ expectations concerning the first two big tech earnings to hit the wire.

Intel To Report a Slight Beat Even as Challenges Remain

Intel is likely to report a slight beat, driven by strong PC demand and a recovery in Enterprise & Government, analyst Hans Mosesmann said in a note. Sales and non-GAAP EPS are expected to come in above the consensus estimate of $18.4 billion and 91 cents, respectively.

During the conference call, the analyst expects CEO Pat Gelsinger to discuss PC demand for 2022, industry-wide supply constraints and an update on the company’s semiconductor fabrication plants (fabs), among other topics.

Intel is likely to guide September quarter revenue and EPS slightly above the consensus estimate of $17.6 billion and 85 cents, respectively, the analyst said.

The 2022 guidance is likely to be flat, given the various data center dynamics that include Sapphire Rapid delays and the cancellation of the scalable Xe HP GPU, he added.

“We continue to see structural challenges, heightened execution risk, an overly aggressive sales growth goal, and years of low-50’s percent gross margins as challenging,” Mosesmann said.

Texas Instruments Setting Up Nicely in 2022

Rosenblatt is bracing for Texas Instrument’s sales to come in above the consensus estimate of a mid-single-digit sequential drop and EPS to exceed the consensus of $1.94, Mosesmann said.

A rebound in industrial and continued momentum in automotive is expected, and the company will likely spend the next several quarters trying to keep up with demand, the analyst said.

The analyst also looks forward to any commentary surrounding “hotspot” lead times and fab investments/plans on increased capacity. The company will likely guide March quarter revenues above the consensus estimate of low-single-digit sequential growth and EPS to $1.89, the analyst said.

Big capacity additions are expected to come online from Texas Instruments in 2022 and these additions will lead to significant analog share gains for years to come, as competitors lack the scale to build 300mm capacity and/or tightness in foundry and structural shortages of 200mm lagging edge fabs, Mosesmann said.

This tailwind, along with a continued emphasis on Industrial & Automotive and strong excess cash return, set up the company nicely in 2022, he added.

Mosesmann has a Sell rating on Intel and a $40 price target. The analyst rates Texas Instruments a Buy with a $230 price target.

By Shanthi Rexaline

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