Why Is Intel (INTC) Stock Rocketing Higher Today

What Happened:Shares of computer processor maker Intel (NASDAQ:)
jumped 7.18% in the afternoon session after the company reported third quarter results that blew past analysts’ revenue and EPS expectations. The Client Computing Group (CCG), which is the largest segment, outperformed revenue estimates by a wide margin. PC demand seems to be improving. We were also glad its operating margin improved. Lastly, the company’s Q4 outlook was comfortably ahead. Zooming out, we think this was a great quarter that shareholders will appreciate, especially in light of some lackluster quarterly performance in the last year or two.

Following the impressive results, HSBC upgraded the stock’s rating from Reduce (Sell) to Hold (Neutral) and raised the price target from $27 to $33, noting, “while concerns around data centre demand remains, improving PC demand and overall execution are incremental tailwinds.”

Is now the time to buy Intel? Find out by reading the original article on StockStory.

What is the market telling us:Intel’s shares are somewhat volatile and over the last year have had 14 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The biggest move we wrote about over the last year was 3 months ago, when the company gained 8.2% on the news that the company reported second quarter earnings that beat analysts’ revenue and earnings per share (EPS) expectations. In May 2023 at a bank conference presentation, Intel management remarked that the company’s Q2’23 revenue would come in at the high end of guidance. Instead, it exceeded the high end, which is a big positive for a company where there are questions about revenue stability. Management attributed the impressive topline results to the strength of the Foundry business, which grew by a whopping 307% year on year, offsetting some of the declines recorded in other segments.

Additionally, next quarter’s revenue and EPS guidance both slightly exceeded Consensus expectations. Inventory levels also improved. On the other hand, its deteriorating operating margin isn’t a great sign but it’s comforting that unlike last quarter, the company generated a positive adjusted operating profit.

The company touched on its positioning and capabilities in the growing AI market, adding that “AI is 1 of our 5 superpowers along with pervasive connectivity, ubiquitous compute, cloud to edge infrastructure and sensing, underpinning a $1 trillion semi industry by 2030. Intel Foundry Services, or IFS, positions us to further capitalize on the AI market opportunity as well as the growing need for a secure, diversified and resilient global supply chain.”

The bullish commentary is encouraging, given that the Data Center and AI segment was down 15% year on year. Wall Street analysts also raised concerns about the segment’s performance. TD Cowen analyst Matthew Ramsay added that “Headwinds remain in [Data Center and AI group] as cloud share loss, soft enterprise/China and AI spending shifts continue.”. This highlighted the growing sentiment that Intel could demonstrate more strength in the AI market, which is up for grabs as tech platforms jostle for dominance and market share.

Overall, the results were positive amid low expectations, and shareholders should feel optimistic.

Intel is up 33.9% since the beginning of the year, and at $35.82 per share it is trading close to its 52-week high of $38.86 from September 2023. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $788.10.