Intel stock spikes on Q4 outlook, Dow Jones rises

• Intel stock has its best performance in some time.
• INTC shares lifted 8% by better Q4 guidance.
• Intel misses on bottom line with $-0.46 loss in Q3
• Revenue was benefited by AI and Edge computing.

 

Intel (INTC) stock surged more than 8% on Friday after the embattled legacy semiconductor firm announced major progress on its plan to trim $10 billion in cost reductions in 2025 while releasing results for the third quarter.

Intel missed on the bottom line, but the market is rewarding INTC shares due to its improving Q4 outlook and better topline result for Q3.

The Dow Jones Industrial Average (DJIA), of which Intel is its smallest weighting, gained more than 0.8% late in the session. That put the Dow Jones index neck-and-neck with the NASDAQ. Both indices were likewise greatly benefited by Amazon (AMZN) spiking more than 6% as well.

Intel stock news

Intel lost $-0.46 per share in adjusted earnings in the third quarter, which was a whopping 43 cents lower than the Wall Street consensus. Its GAAP EPS was even worse, arriving at $-3.88, but that figure relied on $15.9 billion worth of impairment charges and $2.8 billion of restructuring charges.

Traders, however, largely focused on Intel producing Q3 sales of $13.28 billion, which was $240 million ahead of consensus and 6% lower from a year earlier.

Intel generated $7.3 billion in sales from its Client Computing Group, slightly below consensus. Data Center & AI revenue reached $3.35B, up 9% YoY. Sales by spun-out former acquisition Mobileye (MBLY) topped $485 million. The Network & Edge unit featured $1.5 billion in sales, up 4% YoY, while the company's foundry segment saw revenue sink to $4.4 billion, down 8% YoY.

Intel had announced during the summer that it planned to layoff about 15% of the workforce in order to obtain major cost reductions. More recently, delays to investments in its foundry division were also announced in order to keep costs under control as the firm shifts toward a more classic structure of having both design and manufacturing capabilities in house.

“Our Q3 results underscore the solid progress we are making against the plan we outlined last quarter to reduce costs,” said CEO Pat Gelsinger in a statement. “The momentum we are building across our product portfolio to maximize the value of our x86 franchise, combined with the strong interest Intel 18A is attracting from foundry customers, reflects the impact of our actions and the opportunities ahead.”

In terms of the fourth quarter, Gelsinger and company guided for sales to arrive near a midpoint of $13.8 billion above the $13.66 billion that Wall Street analysts had earlier mentioned. Management also guided for adjusted EPS of $0.12, about 50% above consensus, and an adjusted gross margin of 39.5%.

Morgan Stanley's Joseph Moore was unimpressed, saying that the market's reaction demonstrated "just how low expectations have become, as the quarter was unremarkable, and the sense that they will stay the course was clear at mid-quarter."

Despite the criticism, Moore raised his $25 price target to $25.58. Evercore ISI analyst Mark Lipacis raised his price target by a dollar to $26. Both analysts maintained that they need to see more progress on the foundry end to recommend the stock.

Intel stock forecast

Intel stock still needs to overcome the $24.90 support turned resistance level, which we at FXStreet have been saying for months. One good sign is that the Relative Strength Index (RSI) is finally moving above the 50 neutral line, which means some momentum is emerging. But most of that is just based on earnings. The RSI had been at 41 on Thursday, but looks to close the week near 55.

Support remains at $19.00 based on the sell-off and price action in August and September.

INTC daily stock chart