Intel Q3 Earnings: Cost-Cutting, Strategic Initiatives in Focus After Nvidia, Government Investments
Intel Q3 Earnings: Cost-Cutting, Strategic Initiatives in Focus After Nvidia, Government Investments
- Intel to report earnings on Thursday, October 23, after the market close.
- The report is set to offer further guidance on recent strategic initiatives.
- Intel trades with an implied volatility rank (IVR) of 64.8, signaling increased volatility.
Intel to report earnings after stock surges on strategic initiatives and partnerships
Intel (INTC) is scheduled to release fiscal third-quarter results on Thursday, October 23, after the market close. It’s a highly anticipated report following a big move higher in the stock from September when Intel rose from 25 to 38 per share following several bullish developments.
On September 18, Nvidia (NVDA) announced it would invest $5 billion in Intel, acquiring a 4% ownership stake to launch a strategic partnership between the two chip stocks. Intel and Nvidia will develop new data centers, integrate some technology and produce PC products in conjunction with one another.
A month earlier, the U.S. government acquired a 10% stake in Intel, offering the chip maker financial support and a show of strategic support for the industry. There was heavy volume buying after the news crossed the wires as institutional buyers moved to buy shares of a company that is now seen as a strategic U.S. asset.
Given the confluence of events that have taken place over the last several months, this earnings report will likely offer additional guidance on how Intel plans to capitalize on their strategic initiatives going forward. A beat on the headline numbers would be encouraging of course, but investors will also be dialed into the conference call with management to gauge the path forward for the stock price.
What do investors expect?
According to TradingView, Intel is expected to report earnings per share (EPS) of $0.02 on $13.17 billion in revenue. That would compare to a year ago when Intel reported an EPS of -$0.46 on $13.28 billion in revenue. Last quarter, Intel reported an EPS of -$0.10 on $12.86 billion in revenue.
Intel is pushing hard to return to a profitable framework, with cost-cutting measures in full swing. The company cut headcount by over 10% last year and those headcount reductions remain a work in progress.
Panther Lake, Intel’s next-generation processor, is expected to launch later this year. It will be the first client SoC built out on 18A process nodes, with an NPU capable of 50 TOPS to focus on artificial intelligence workloads.
Investors also want to hear about how the Intel Foundry Services (IFS) is progressing. PC refresh cycles should also help the Client Computing Group (CCG) after the introduction of its Ultra 200V series processors. The push of Xeon 6 and Gaudi 3 processors and accelerators will also be critical for the Data Center and AI Group (DCAI).
Trading Intel earnings
Intel traded with an implied volatility rank (IVR) of 66.0, meaning that volatility is elevated compared to the past twelve months of trading. For options traders, the increased implied volatility is a welcome development, as it gives more flexibility in structuring strategies to take advantage of an expected collapse in volatility post earnings.
Options traders see Intel with an expected move of +/- 3.67 points, or 10.07% of Wednesday’s 36.45 stock price. That is slightly above the average 5% to 10% post-earnings move for S&P 500 companies.
Options traders that expect Intel to remain inside of that expected move may benefit from an iron condor where the short options are just outside of the expected move. Directional bets could also be viable strategies for traders expecting an outsized up or down move post earnings.
Technically, Intel’s position weakened on Wednesday ahead of the earnings announcement after it dropped over 4% through mid-day trading. That move pushed prices below the 9-day exponential moving average (EMA).
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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