INTC rises nearly 10% on earnings surprise, robust Q4 outlook

• Intel nearly doubles earnings expectations for Q3.
• Revenue comes in strong on rising PC sales.
• Wall Street analysts raise their price targets on newfound trust in execution.
• Q4 outlook jumps well ahead of consensus forecasts.

Intel (INTC) stock soared 9.7% mid-session on Friday after the legacy semiconductor company posted earnings nearly double Wall Street’s expectation. The PC market appears to be conducting a turnaround of sorts after the first half of 2023 saw laptop sales decline.

JPMorgan raised its price target on Intel stock from $35 to $37, praising the company’s management for their execution. INTC stock is trading above $35.50 at the time of writing. HSBC raised its price target on INTC from $27 to $33.

The market is mixed on Friday following Personal Consumption Expenditures (PCE) data – the favored method of calculating inflation by the Federal Reserve – showing that inflation appears to be easing. The NASDAQ jumped on the PCE reading, rising 1.2%. The S&P 500 is lightly ahead, while the Dow Jones is down 0.4% as component Chevron (CVX) saw its stock collapse over 5% on its own earnings results.

Intel earnings news: PCs are back in vogue, Q4 outlook rises

Wall Street had expected CEO Pat Gelsinger’s Intel to post Q3 adjusted earnings of $0.22 per share. Instead, Intel earned $0.41 per share.

Revenue, likewise, came in above consensus at $14.16 billion, about $560 million ahead of the average forecast.

“Overall, we are seeing continued solid execution by the team, compute fundamentals continue gradually improving, and although we continue to be impressed by the current execution, the next 12 months will be the most difficult for the team as they will be launching three datacenter products and one major client product over three new manufacturing technology nodes” wrote JPMorgan analyst Harlan Sur in a client note.

Analysts were also excited to see that Intel’s strategy of re-entering the foundry sector of the chip industry was beginning to pay dividends. Revenue in that segment nearly quadrupled to $311 million.

Following the release, Mizuho Securities forecast that PC sales will rise 3% in 2024 after dropping about 10% this year.

“We continue to make meaningful progress on our IDM 2.0 transformation by relentlessly advancing our strategy,” Gelsinger said in a statement.

For the fourth quarter, Gelsinger and company now predict sales between $14.6 billion and $15.6 billion, well ahead of prior consensus of $14.35 billion.

Intel stock forecast

Intel stock significantly gapped up on Friday, and INTC’s share price looks likely to overtake the high from October 12 of $37.22. From there, it’s  a straight road to the low $40s as that is where the upper trendline falls. The ascending trend channel that began in March of this year shows that market enthusiasm for Intel is refusing to wane. 

The Relative Strength Index (RSI) jumped from 32 (near oversold territory) to 52 (above average) just on Friday alone.

INTC daily chart