Intel’s stock price movement
Intel (INTC) stock fell as much as 8% in extended trading on January 24 after the chip maker reported a soft fourth quarter of 2018 and weak guidance for 2019. Intel stock rose 3.8% and closed at $49.76 on January 24 amid a broader chip stock rally. The stock has risen ~6.0% since the beginning of 2019 and ~1.9% in the past year as of January 24.
In comparison, the shares of Intel’s peers NVIDIA (NVDA), Qualcomm (QCOM), and Micron (MU) have fallen ~35%, ~22.1% and ~16.2%, respectively, in the last year amid a major tech sell-off due to trade war fears, rising interest rates, and a sudden surge in demand in the PC market. In contrast, Advanced Micro Devices (AMD) has risen ~61% in the same period.
Sluggish fourth-quarter results
Intel posted adjusted EPS of $1.28 in the quarter, higher than analysts’ consensus expectation of $1.22. Its earnings also increased 18% YoY (year-over-year). Strong revenue and lower operating expenses drove its earnings growth in the quarter.
The company’s revenue of $18.66 billion increased only 9% YoY in the fourth quarter, lower than the previous quarter’s growth of 19%. Its soft revenue was the result of weaker demand in China, slower cloud spending, and falling flash memory prices. Its revenue also missed the consensus estimate of $19.01 billion.
Slower cloud demand is expected to pressure the company’s first half of 2019. Nevertheless, it expects the trend to improve in the second half.
The semiconductor giant expects weak guidance for the first quarter of 2019 after reporting weaker-than-expected revenue in the fourth quarter due to a slowdown in China and weaker demand for its data center and modem chips.
Looking forward, Intel expects adjusted EPS of $0.87 and revenue of $16 billion in the first quarter. For 2019, Intel expects adjusted EPS of $4.60 and revenue of ~$71.5 billion.