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Key Takeaways
- Intel shares were down more than 10% in pre-market trading after the chipmaker issued a soft first quarter outlook, citing weakness in several of its subsidiaries and the company’s programmable chip unit.
- Intel CEO Pat Gelsinger anticipates the PC market to normalize throughout 2024 after a two-year slump.
- Intel shares look susceptible to breaking down from a head and shoulders chart pattern.
Intel Corporation
Source: TradingView.com.
Despite delivering better-than-expected fourth quarter results, Intel (INTC) shares were down sharply before the opening bell Friday after the chipmaker issued a grim outlook for the current quarter. The company projects first quarter adjusted earnings to come in at 13 cents per share on revenue of between $12.2 billion and $13.2 billion, falling well short of Wall Street’s expectations.
Intel CEO Pat Gelsinger said that although the chipmaker’s core businesses of PCs and servers remains healthy, sales in the current quarter would come under pressure from weakness in several of its subsidiaries and the company’s programmable chip unit. “The core business we see as healthy. We see no areas for market share loss and the products are getting stronger,” Gelsinger told analysts during the earnings call. The Intel chief also noted that the company has AI chips orders worth $2 billion and said he anticipates sales to improve later this year.
In the fourth quarter, the company reported revenue of $15.40 billion, boosted by a 33% jump in sales from its Client Computing division, which houses PC and laptop processor chips. Gelsinger pointed to the gaming and commercial sectors as pockets of strength within PC chip market, expecting it to normalize more broadly from a two-year slump throughout 2024.
Intel shares broke out from a nine-month ascending channel in mid-December but have subsequently failed to gain further upside momentum. Investors on Friday should monitor where the stock closes in relation to its 50-day moving average. A close below the indicator would confirm a head and shoulders topping pattern, opening the door for a fall to the channel’s lower trendline. Conversely, a successful hold of the indicator could see bulls make another attempt at a move higher.
Intel shares were down 10.6% at $44.31 about two hours before the opening bell. As of Thursday’s close, the stock had gained 65% over the past year.
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