Intel outperformed revenue forecasts by $1.7 billion, delivering its strongest growth in over 15 years with $16.1 billion in sales, a 25% increase year-over-year. However, despite the upbeat earnings report, the stock tumbled nearly 11% as investors reacted with caution.
Chief Executive Lip-Bu Tan highlighted the company's solid performance, particularly in its data center and AI division, which surged 59% to $6.3 billion. Adjusted earnings came in at 42 cents per share, well above analyst expectations of $14.42 billion in revenue. Finance chief Dave Zinsner indicated plans to ramp up investment in manufacturing capacity, promising increased spending on factory equipment and materials. Still, heavy selling pressure sent shares down, with Intel’s relative strength index (RSI) dropping to 29.07, signaling oversold conditions.
AMD Shares Also Decline Amid Broader Chip Sector Weakness
Not far behind, AMD stock slid 5.5% despite positive news, including a $5 billion investment and a commitment to supply 2 gigawatts of chips to Anthropic. The chip sector has been under pressure with the SOXX semiconductor ETF trading about 15.7% below its June peak.
Scott Rubner, Citadel Securities’ head of equity derivatives strategy, described the market’s current state as a "rare chip signal," reflecting unusual weakness across leading companies.
Adding to the complexity, CNBC’s Jim Cramer turned bullish on Intel right after the earnings release but remained cautious on the broader market, citing factors such as rising interest rates, geopolitical tensions in the Middle East, and oil prices. Cramer admitted he struggled to find compelling reasons to buy, emphasizing his inclination to sell amid current conditions.
Research from Management Science suggests that Cramer's stock picks tend to gain 2.4% overnight but often see those gains dissipate over the ensuing months, particularly in smaller, less liquid stocks. Intel’s significant drop defied this trend in a striking fashion.
Meanwhile, the 10-year US Treasury yield climbed to its highest point since January, adding pressure on tech stocks and influencing investor sentiment going into Monday’s market open.
