Intel stock jumped on Friday after the chipmaker delivered better-than-expected results for the third quarter and guided estimates higher for the current period.
The Santa Clara, Calif.-based company late Thursday said it earned an adjusted 41 cents a share on sales of $14.16 billion in the September quarter. Analysts polled by FactSet had expected Intel earnings of 22 cents a share on sales of $13.57 billion. However, on a year-over-year basis, Intel earnings slid 31% while sales dropped 8%.
Intel's earnings have declined for eight straight quarters while sales have fallen for seven quarters in a row. But Intel predicted a return to sales and earnings growth in the fourth quarter.
For the current quarter, Intel forecast adjusted earnings of 44 cents a share, up 340%, on sales of $15.1 billion, up 8%.
Intel Stock Retakes Key Level
On the stock market today, Intel stock surged 9.3% to close at 35.54. With the rise, Intel stock retook its 50-day moving average line.
Much of Intel's improved outlook is due to stabilizing personal computer sales. PC sales surged in the work-from-home and school-at-home booms during the Covid pandemic but fell after the crisis was over.
Other PC-related stocks also rose Friday. Rival chipmaker Advanced Micro Devices saw its stock climb 3% to 96.43. Shares of Windows PC software giant Microsoft advanced 0.6% to 329.81. PC maker Dell Technologies saw its shares climb 2.3% to 65.96.
AI PCs Are On The Way
On a conference call with analysts, Intel Chief Executive Pat Gelsinger said customers cleared out their PC inventories in the first half of 2023 in preparation for a new round of growth.
"As we expected, customers completed their inventory burn in the first half of the year, driving solid sequential growth, which we expect will continue into Q4," Gelsinger said.
He added, "We expect full-year 2023 PC consumption to be in line with our Q1 expectations of approximately 270 million units. In the near-term, we expect Windows 10 end-of-service to be a tailwind, and we remain positive on the long-term outlook for PC (sales) returning to plus-or-minus 300 million units."
Intel also sees an inflection point coming in the PC industry with the arrival of the first AI PCs, Gelsinger said. The chipmaker introduced its first PC processor optimized for artificial intelligence, Intel Core Ultra, in the third quarter. That product will launch in new PCs on Dec. 14, he said.
Intel Stock Gets Price-Target Hikes
Raymond James analyst Srini Pajjuri reiterated his outperform rating on Intel stock and upped his price target to 42 from 40.
The "PC market appears ripe for an upgrade cycle in the next 12-18 months," Pajjuri said in a client note.
At least eight Wall Street analysts raised their price targets on Intel stock on Friday. However, many of them are still neutral or negative on the name.
Intel stock ranks No. 13 out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has a subpar IBD Composite Rating of 48 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
