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A stabilizing PC market is proving to be a nice tailwind for Intel (INTC) - Get Intel Corporation Report. And when combined with sizable orders from Apple (AAPL) - Get Apple Inc. Report, cloud giants and flash memory clients, the stage is set for a strong start to 2017.

But in spite of all this, the chip giant's full-year outlook is quite subdued. Some bulls have argued Intel is just being conservative, but there are reasons to think other factors are also at work.

Intel reported fourth-quarter revenue of $16.4 billion (up 10% annually) and adjusted EPS of $0.73, topping consensus analyst estimates of $15.8 billion and 75 cents. The company also guided for first-quarter revenue of $14.8 billion, plus or minus $500 million, and adjusted EPS of 65 cents. That's favorable to a pre-earnings consensus of $14.5 billion and 61 cents.

Intel is only guiding for 2017 revenue to be flat relative to a 2016 level of $59.5 billion. That's officially below a pre-earnings consensus of $60.9 billion (2% growth), but the company notes its outlook implies low single-digit growth if one backs out its security software business, which won't be on the books after a pending deal to spin out the unit closes in the second quarter. 2017 EPS guidance of $2.80 is in line with prior estimates.

Still, even in-line guidance seems tame given Intel's fourth-quarter results and first-quarter outlook. On its earnings call, Intel suggested its 2017 PC outlook is more conservative than that of some third parties and that it forecasts a midsingle-digit industry decline. Research firms IDC and Gartner respectively estimate PC shipments fell 1.5% and 3.7% in the fourth quarter, much smaller declines than were seen earlier in the year.

Improving PC demand, along with iPhone 7 modem sales to Apple, allowed Intel's Client Computing Group (CCG) to post fourth-quarter revenue of $9.1 billion (up 4% annually) in spite of inventory cuts within the PC supply chain. That topped a consensus estimate of $8.6 billion, and was the biggest factor behind Intel's fourth-quarter beat.

In addition, Microsoft (MSFT) - Get Microsoft Corporation Report reported its Windows OEM and commercial sales each rose 5% in the fourth quarter. And improving orders from PC makers contributed to the strong results and guidance hard drive giants Seagate (STX) - Get Seagate Technology Holdings PLC Reportand Western Digital posted earlier this week.

Given all of this, one has to wonder if Intel's cautious PC outlook has something to do with the pending launch of AMD's (AMD) - Get Advanced Micro Devices, Inc. ReportRyzen CPUs. Though unlikely to blow away Intel's recently-launched Kaby Lake CPUs, early benchmarks suggest Ryzen will make AMD much more competitive in the midrange and high-end PC CPU markets than it has been for a while. When asked about Ryzen on the call, Intel insisted it remains confident in its competitive position.

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Also affecting Intel's full-year guidance: The company now only expects high single-digit growth from its Data Center Group (DCG), which (among other things) is the world's biggest server CPU supplier. That's below a prior target for 10% to 12% annual growth, and is blamed on soft enterprise demand.

The outlook comes even though DCG's sales to cloud service providers (benefiting from surging capex) grew 24%, and its sales to telecom service providers (benefiting from network functions virtualization) grew 19%. Intel also reported strong demand for networking and storage processors, and for non-processor DCG solutions such as Ethernet chips and its Omni-Path server interconnect fabric.

Weak enterprise server sales, caused in large part by business workloads migrating to the cloud, seems to be partly offsetting all of this. The fact cloud giants such as Amazon and Microsoft tend to be more efficient than enterprises at using server and storage resources also doesn't help Intel here.

DCG still has a lot going for it--in addition to the aforementioned growth drivers, there's Intel Xeon Phi processor line, which is often used for high-performance computing (HPC) and AI workloads--but it's increasingly looking as if the business won't grow as fast as once hoped.

And with regards to future earnings, it's worth noting Intel set a 2017 capital spending budget of $12 billion, plus or minus $500 million. That's well above a 2016 capex level of $9.5 billion, and at the midpoint would slightly top a 2012 capex peak of $11.8 billion. The forecast, which is bound to please chip equipment makers such as Applied Materials (AMAT) - Get Applied Materials, Inc. Report, KLA-Tencor (KLAC) - Get KLA Corporation Report and Lam Research (LRCX) - Get Lam Research Corporation Report, suggests Intel's depreciation expenses will pick up in the coming quarters.

On the call, Intel said it would spend $2.5 billion in capex this year on flash memory investments, up from $1.6 billion last year. The company is looking to aggressively ramp output of low-cost/high-density 3D NAND flash chips, including via major Chinese investments.

It also looks as if Intel is stepping up its efforts to keep pace with the manufacturing process advances of major chip foundries such as Taiwan Semiconductor (TSM) - Get Taiwan Semiconductor Manufacturing Co. Ltd. Report and Samsung, who produce chips for many Intel rivals and have largely eliminated the company's traditional process lead.

Taken together, these headwinds stand to keep a lid on Intel's near-term sales and earnings growth, even as many of the company's efforts to grow sales outside of the PC and enterprise server CPU markets keep bearing fruit.

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