Great Day For Chip Stocks–And Then Intel Misses

Today’s regular session was great for chip stocks. The Vance Vectors Semiconductor ETF (SMH) was up nearly 6% on the day powered by earnings beats for the quarter from Texas Instruments (TXNWealth Strength IndexAAPL is Extremely Up and trending Up) up 6.5%; Xilinx (XLNXWealth Strength IndexAAPL is Extremely Up and trending Up) up 17.5%; and Lam Research (LRCXWealth Strength IndexAAPL is Extremely Up and trending Up) up 14.8%.

And then, after the market close, Intel (INTCWealth Strength IndexAAPL is Extremely Up and trending Up) reported fourth quarter earnings. Like its chip peers Intel beat earnings estimates for the quarter (by 6 cents a share.)

But the company also missed on fourth quarter revenue, reporting a 9.4% year over year growth in revenue to $18.66 billion versus the Wall Street consensus for $19.02 billion.

And then the company told Wall Street to expected lower earnings and revenue in the first quarter of 2019 with earnings at 87 cents a share (vs. consensus projections at $1.01 a share) and revenue of about $16 billion (vs. consensus of $17.38 billion.)

For all of 2019 Intel now expects earnings of $4.60 a share (vs. the $4.54 consensus) and revenue of $7.5 billion (vs. $73.2 billion.)

On the report Intel shares fell by 6.81% in after-hours trading.

One reason the market has been so harsh to Intel in the after-hours session is that unlike chip stocks that had reported earlier where expectations were for really terrible quarters in many cases, Intel shares had been moving up recently. In fact, Intel had just crossed above its 200-day moving average at $49.42 in the regular session today. The drop in after-hours trading to $46.37 took the shares back below that technical level.

(And if you’ve been looking for an example of what I meant when I said that the volatility in this market made it hard to read technical and other indicators, now you’ve got one.)

It will be “interesting” tomorrow to see if Intel still carries enough weight in the chip and technology sectors to lead them downward.