Intel’s first quarter was solid overall, but it doesn’t mask weak results from the data center group.
By Abhinav Davuluri | 04-27-17 | 11:15 PM | Email Article

 Intel reported first-quarter results that were in line with our estimates. The chip leader modestly increased its full-year revenue guidance thanks to average selling price, or ASP, strength in PC processors and growth in its memory business, while providing an aggressive spending reduction target for 2020. Despite these highlights, we remain concerned with the relatively tepid top-line growth in Intel’s crown jewel data center group, or DCG. The first quarter marked the sixth consecutive period of sub-10% year-over-year revenue growth in DCG. We remind investors that Intel revised its long-term DCG growth rate downward from 15% to the high-single digits. Shares were moderately lower during after-hours trading, and we are maintaining our $31 fair value estimate for wide moat-rated Intel. We recommend prospective investors seek a wider margin of safety before committing capital.

Abhinav Davuluri is an equity analyst for Morningstar.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Securities mentioned in this article

Ticker

Price($)

Change(%)
Morningstar Rating Morningstar Analyst Report
With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds
Abhinav Davuluri does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.
Sponsored Links
Sponsor Center
Content Partners