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Intel Corp INTC is set to report first-quarter 2017 results on Apr 27, after the closing bell. Notably, the company has positive record of earnings surprises in the trailing four quarters, with an average surprise of 9.11%.

Last quarter, the company posted a positive earnings surprise of 5.33%. Non-GAAP earnings of 79 cents per share increased almost 4% from the year-ago quarter but declined 1.3% sequentially.

Strong year-over-year earnings growth was driven by 9.8% increase in revenues, which totaled $16.37 billion and comfortably surpassed the Zacks Consensus Estimate of nearly $15.80 billion. Revenues increased 3.8% sequentially.

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Intel guided first-quarter 2017 revenues of around $14.8 billion (+/-$500 million), almost flat sequentially. The non-GAAP gross margin is expected to be around 63% (+/-1%). R&D and MG&A expenses are anticipated to come in at around $5.3 billion.

Operating income is projected to be approximately $4.1 billion, while earnings are anticipated to be 65 cents (+/- 5 cents) per share.

The lacklustre guidance along with declining growth in core PC and data center markets has hurt share price movement on a year-to-date basis. Intel shares have inched up 0.2% as compared with the Zacks Semiconductor General industrys gain of 2.1%.

Lets see how things are shaping up for this announcement.

Factors at Play

We note that Intels growing focus into areas with better growth prospects, such as the artificial intelligence (AI), autonomous car and Internet of Things (IoT) businesses are key catalysts.

In this regard, the acquisition of Mobileye is a significant development that will boost its presence in the autonomous vehicle market. Further, the recently completed divestiture of the security business will help the company to focus on these fast growing businesses.

However, increasing competition in the data center market is a headwind. Reportedly, Microsoft is collaborating with ARM chip-makers Qualcomm QCOM and Cavium to design ARM-based servers, which will run a major part of its cloud services going ahead. (Read More: Microsoft Says Yes to ARM-Based Chips for its Cloud Servers)

Moreover, per IDC data worldwide server shipments decreased 3.5% year over year to 2.55 million units in fourth-quarter of 2016. The research firm cited slowdown in hyperscale datacenter growth and continued drag from declining high-end server sales as the primary reason behind this decline.

The data center business now comprises a major part of Intels overall business (29% of 2016 revenues). Hence, a decline in the server shipment amid intensifying competition is a major concern for the company.

Moreover, sluggish PC market growth will also continue to hurt Client Computing Group (55.8% of revenues) growth. Despite strong PC shipments in the first quarter as per data available from both Gartner and IDC we believe they are not sufficient enough to drive significant growth for the segment in the near term. (Read More: Strong PC Shipments Witnessed in Q1: Gartner, IDC)

Earnings Whispers

Our proven model does not conclusively show that Intel will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 65 cents. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before theyre reported with our Earnings ESP Filter.

Zacks Rank: Intel carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Teradyne TER, with an Earnings ESP of +2.63% and a Zacks Rank #1. You can see the complete list of todays Zacks #1 Rank stocks here.

Seagate Technology STX, with an Earnings ESP of +3.77% and a Zacks Rank #2.

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Intel (INTC) to Report Q1 Earnings: What's in the Cards? - Yahoo Finance