Intel Rallies As Traders Cheer Job-Cut Plans

Key Insights

• Intel gained 10% after the release of a better-than-expected earnings report. 
• Traders cheered Intel’s plans for aggressive cost cuts. 
• The market was able to shrug off the weak guidance for the next quarter. 

Intel Shares Test Multi-Week Highs

Intel gained 10% in today’s trading session as traders cheered the company’s job cut plans.

Intel announced revenue of $15.3 billion and adjusted earnings of $0.59 per share, meeting analyst estimates on revenue and beating them on earnings.

Intel stock declined from the highs near $68 in 2021 to the recent lows near $25, so market’s expectations were modest ahead of the report.

The company revised its full-year revenue guidance to $63 billion – $64 billion to reflect the continued macroeconomic headwinds. In the fourth quarter, Intel plans to report revenue of $14 – $15 billion, so the company’s revenue would decline compared to third-quarter levels.

Inteд’s capex forecast was cut from $27 billion to $25 billion as Intel remained focused on cutting costs. In the longer term, Intel expects to deliver $8 billion – $10 billion in annual savings by the end of 2025. The company will focus on optimizing its business and controlling costs.

Pat Gelsinger, Intel CEO, noted: “To position ourselves for this business cycle, we are aggressively addressing costs and driving efficiencies across the business to accelerate our IDM 2.0 flywheel for the digital future.”

The Market Is Ready To Buy Cheap Tech Stocks

The market sentiment in the tech segment has been weak in recent weeks. Traders’ reaction to Intel’s report shows that some market participants are ready to buy beaten stocks in the tech segment if companies present a viable plan for the future.

Intel is trading at levels that were last seen back in 2016, and it’s not surprising to see that some traders are ready to bet on a successful turnaround.

In the near term, traders will likely stay focused on general sentiment in the tech segment. Big names like Microsoft, Alphabet, Meta have been under serious pressure in recent months, and it remains to be seen whether the tech segment will gain sustainable upside momentum at a time when the Fed is raising rates aggressively.

For a look at all of today’s economic events, check out our economic calendar.