Intel struggles to support after Q2 warning
The component Dow Intel Corp. (INTC) is trading down more than 4% after hitting Q1 2022 estimates and guiding Q2 earnings below consensus. The chip giant posted earnings of $0.87 per share in the quarter, while revenue fell 6.6% year-over-year to $18.4 billion. The company reaffirmed fiscal 2022 numbers, but the mixed outlook hasn’t fared well, with rising inflation, chronic supply chain issues and long-term instability in Eastern Europe. Is weighing on the feeling.
Bad year for chip stocks
The chip sector has struggled so far in 2022, posting year-to-date losses across the board. The PHLX Semiconductor Index is down 23% and shows no signs of stabilizing as industry leaders such as Advanced Micro Devices Inc. (AMD) and NVIDIA Corp. (NVDA) being at a 9-month low. Intel outperforms the sector with a 10% loss, but has lost 35% since April 2021, while accumulation has fallen to a 9-year low.
CEO Pat Gelsinger commented on the mixed report, insisting that the first quarter “was a strong start to the year, exceeding expectations in both revenue and earnings. With a market opportunity With $1 trillion ahead of us, we remain focused on our IDM 2.0 strategy. We executed this strategy well in the first quarter, delivering key product and technology milestones and announcing capacity expansion plans. manufacturing facilities in the United States and Europe to meet the continued demand for semiconductors and to create a more balanced and resilient global supply chain.
Wall Street and Technical Outlook
The Wall Street consensus is an apathetic ‘hold’ rating based on 7 ‘buy’, 2 ‘overweight’, 22 ‘hold’ and 3 ‘underweight’ recommendations. In addition, six analysts are now recommending shareholders to close their positions and move to the sidelines. Price targets currently range from a low of $40 to a high of $75, while the stock is expected to open Friday’s session more than $5 below the midpoint target of $50. Further downside revisions at this point could trigger a quick decline towards the target low.
Intel sold from 75.81 to 12.06 between 2000 and 2009 and has traded within those limits for the past 13 years. A slow rise reversed at the 0.786 Fibonacci retracement level in January 2020, while an April 2021 test triggered a reversal that gave up over 23 points in Friday’s opening bell. The stock is now resting on horizontal support that has been tested multiple times since 2017, with each occurrence increasing the odds of a historic breakdown.
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Disclosure: The author held no position in the aforementioned titles at the time of publication.