Markets Turn to Intel Earnings After Geopolitics Cool

After being rattled by geopolitics earlier in the week, traders turn to a surging earnings season for reassurance, with Intel earnings expected to drive the AI-tech trade.

Key Developments and Expectations

• Nasdaq rose in relief after Trump announced a framework deal on Greenland, with Intel rising on continued AI demand to help support Intel shares ahead of earnings.
• Intel is expected to post a 38% drop in earnings to $0.08/share, with revenue declining by 6.1%.
• Market focus is likely on the company's guidance for next quarter and insight into the chip market, after TSMC said demand exceeded supply.

Trade Woes Weigh on Markets, Intel Surges

Markets jumped on Wednesday after US President Donald Trump signalled a de-escalation over Greenland, with the Nasdaq rising 1.2%. However, the gains were not enough to erase losses from earlier in the week. The tech-heavy index was down 2.39% on Tuesday alone, the worst performance since the US-China trade crisis of last October, with losses led by Amazon and Tesla. But Intel shares jumped nearly 7% at the time, after analysts expressed confidence in the demand for artificial intelligence data centres. Multiple brokerages revised their outlooks for the company ahead of earnings, with KeyBank among those raising their rating and price target. The analysts noted a positive shift in the company's manufacturing processes, driven by advances in its A18 product. Multiple analysts noted continued exceptional demand from hyperscalers and data centre operators, who have bought up all of this year's supply of server processors.

The outlook dovetails with chipmaking rival TSMC's earnings last week, which beat expectations across the board amid continued demand for processors. Markets will be keenly watching Intel's earnings for clues into the AI-driven stock boom and its longevity. However, the company is facing a potential drop in sales, and the question remains whether its recent collaboration with Nvidia and government-backed plans to boost US manufacturing can reverse its underperformance last year.

Intel and Traders Look to the Future

The chipmaker's share price has more than doubled since last year, with almost all of those gains coming in the last quarter after the company posted a major earnings beat. This puts the bar pretty high, especially given that analysts expect Intel's Q4 EPS to drop to $0.08 from $0.13 a year ago. Sales are projected to slip 6% to $13.4 billion. However, traders might look beyond earnings and instead focus on guidance amid hopes it could ride the AI surge. The company unveiled its latest chips at CES earlier in the month, launching a new class of Core Ultra processors. Traders will likely be looking for insight into how sales have progressed and the demand situation. At its last earnings, Intel said that demand was outpacing supply, a sentiment echoed by TSMC last week, and traders are likely looking for that key phrase to be repeated.

Intel has crossed above the $50 level for the first time in four years, with both VWAP lines expanding suggesting a breakout towards new records may be possible. If the post-earnings environment keeps INTC stock above the round support or the $51 high, the next strong resistance below the record highs of $69 lies at the $60 level. However, a disappointing earnings report or guidance could see recent gains diminish under the $50 support, open the door to the current upper VWAP at $45.80 and subsequently expose the $40 level.

Source: SpreadEx | Intel Corporation | Weekly Chart