Intel Near 2024 Lows Ahead of Earnings: Will the Stock Recover?
Intel Near 2024 Lows Ahead of Earnings: Will the Stock Recover?
The AI race is coming into focus amid semiconductor volatility
Intel is scheduled to report Q2 earnings on Thursday, Aug. 1 after the market close.
The chipmaker is expected to post earnings of $0.09 on $11.93 billion in revenue.
The stock’s volatility is elevated ahead of earnings, and options put the expected move at +/- 2.51 points, or 8% of today’s stock price.
Intel (INTC) is scheduled to report second-quarter fiscal earnings after the market closes on Thursday, Aug. 1. A conference call with management will follow at 4:00 p.m. EDT.
Intel stock is down about 37% since the start of the year, with much of the losses accumulated during April, when the chipmaker reported heavy operating losses in its foundry unit business as it attempted to recapture market share from Taiwan Semiconductor Manufacturing (TSM).
However, INTC has outperformed the broader chip sector in July. The VanEck Semiconductor ETF (SMH) is down nearly 8% this month, as the Biden administration weighs a measure that would potentially stop foreign chipmakers from selling products containing American technology. The increased odds for a Trump presidency following this month’s assassination attempt are also fueling concerns over a new trade war between the U.S. and China.
Intel numbers: What do investors expect?
According to Yahoo Finance, analysts expect Intel to report Q2 earnings per share (EPS) of $0.09 on $11.93 billion in revenue. That would mark a decline from a year ago when Intel reported Q2 EPS of $0.13 on $12.95 billion in revenue.
Intel has a good track record of beating estimates, however. The company beat EPS estimates in four of the last four earnings cycles.
Intel’s earnings will focus on capital expenditures, spending and its product roadmap. The artificial intelligence (AI) boom provided a major tailwind to semiconductor stocks, but Intel wasn’t positioned to capitalize fully on the trend. Management hopes its third-generation Gaudi 3 chip will capture some market share in AI applications. The industry reception has largely been positive for the new accelerator, but sales need to follow.
Nvidia (NVDA) remains the market leader for GPU chips, the preferred application for AI infrastructure. Advanced Micro Devices (AMD), which is scheduled to report earnings on Tuesday, July 30, is also outpacing Intel’s efforts. NVDA, the favorite AI play for investors, is up over 130% this year, while AMD is down about 5%.
Trading Intel through earnings
Based on options pricing, the expected move for earnings is +2.51 points or 8% of today’s stock price of 31.51. Implied volatility is elevated compared to the past year, with Intel holding a 70.5 implied volatility rank (IVR).
Traders may opt to play credit strategies for earnings, given the elevated volatility. The risk is that Intel moves beyond the expected move.
Technically, the May swing low at 29.73 provides a decisive level that bulls will need to defend. A break below this level would threaten further downside and weaken Intel’s already-weak technical posture.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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