Why Are Intel (INTC) Shares Soaring Today

Jabin Bastian /
2023/06/12 12:20 pm EDT

What Happened:

Shares of computer processor maker Intel (NASDAQ:INTC) jumped 5.12% in the morning session after the company released data showcasing the superior performance of its 4th Gen Intel Xeon processors. The benchmarks and tests demonstrated that Intel's processors outperform the competition in key workloads like AI, data analytics, high-performance computing (HPC), and other critical applications, and this should lead to improved customer experience, revenue growth, and reduced total cost of ownership. Since the first quarter of 2023, the market has reacted favorably to news of innovation in artificial intelligence, and Intel's update on the superior capabilities of its processors -- especially for AI-related use cases -- should raise investors' optimism.

What is the market telling us:

Intel's shares are not very volatile than the market average and over the last year have had only 13 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. The previous big move was 2 months ago, when the company gained 6.38% on the news that memory chipmaker, Micron, reported earnings for the latest quarter. While the results trailed the consensus estimates for revenue and operating profits, Wall Street analysts noted that the semiconductor company had faced a steeper slump than anticipated, but signs of a rebound are emerging. The outlook from the company was optimistic, with Sanjay Mehrotra, the chief executive, affirming his "confidence" in the long-term demand scenario and envisaging "gradual improvements" in the industry's supply-demand equation. The stock reaction suggests that the market is putting more weight on longer-term risk/reward than near-term cyclical results.

Intel is up 23.3% since the beginning of the year, but at $32.99 per share it is still trading 18.8% below its 52-week high of $40.61 from July 2022. Investors who bought $1,000 worth of Intel's shares 5 years ago would now be looking at an investment worth $601.06.

Is now the time to buy Intel? Access our full analysis of the earnings results here, it's free.