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Intel’s stock price rally checked by weak earnings

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The surge in Intel’s stock price was hit by a weak outlook in the latest earnings report, though the longer-term trend is still intact.

IntelSource: Bloomberg

 Written by: Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: 

Intel drops in wake of earnings

Intel Corporation experienced a significant drop in its stock value, plunging over 10% during premarket trading after the semiconductor giant disclosed its fourth-quarter (Q4) results. While Intel surpassed earnings expectations for the quarter, its forward-looking guidance disappointed investors, signalling potential headwinds for the company.

Weak outlook pressures the shares

In a challenging market, Intel forecast Q1 adjusted earnings per share (EPS) of $0.13, a stark contrast to the $0.34 anticipated by analysts. Furthermore, projected revenue for the quarter is estimated to be between $12.2 billion and $13.2 billion, which is notably lower than the anticipated $14.2 billion.

This conservative outlook has raised concerns among traders and investors about the company's near-term growth prospects.

Despite the cautious outlook, Intel's Q4 performance was robust, with adjusted EPS of $0.54, ahead of the expected $0.44. Revenue was also higher than expected, at $15.4 billion.

Intel's Client Computing Group, however, reported a successful quarter with sales amounting to $8.8 billion, surpassing the $8.4 billion forecast by analysts and marking a 33% increase from the previous year. This performance suggests that Intel continues to hold a strong position in the personal computing market.

The company is also making strides in its strategic shift to become a foundry for other chipmakers. Although the Intel Foundry Services division fell short of analyst expectations, generating

$291 million in revenue as opposed to the predicted $ 43 million, this initiative represents a long-term investment in Intel's future as a diversified semiconductor industry leader.

Intel stock price – technical analysis

Following their solid rally over the past year or so, Intel shares have slid through their steep October-to-January uptrend line and trade back below their 200-week simple moving average (SMA) at $44.92 which now acts as resistance, together with the 55-day SMA at $45.01 and the late-November high and mid-January low at $45.34 to $45.65.

Intel weekly candlestick chartSource: TradingView

While this resistance area caps, downside pressure should be maintained with the December low at $41.17 representing a possible downside target.

Intel daily candlestick chartSource: TradingView

For the bulls to be back in control, not only would Friday’s price gap need to get filled but a rise above Thursday’s high at $50.30 would also need to occur. This currently looks highly unlikely, though.



This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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