Intel earnings: Even with PC surge, chip market rebound seems far off
By Wallace Witkowski
Published: Oct 23, 2019 7:24 a.m. ET
PC shipments rise for second straight quarter, but second-half chip recovery looks elusive
Intel Corp. is saddled with expectations to lead a hoped-for turnaround in the semiconductor market, but even unexpected growth in personal-computer sales are unlikely to show that a rebound has begun.
When Intel INTC, -0.23% reports third-quarter earnings on Thursday after the market closes, earnings and revenue are both expected to decline from last year, though less so than other companies in the struggling sector. Cowen analyst Matthew Ramsay said he expects the sector to be mostly in line with estimates that call for chip-related companies’ earnings to fall more than 30% and sales to decline more than 11% as a recovery for the sector likely gets pushed out to 2020.
Despite the drastic declines in financial performance, chip stocks are up about 40% for the year, so Ramsay suggests investors grow selective about chip stocks in the near term and look for specific news. Along with how Huawei and China trade are affecting the industry, Ramsay said investors need to look for how data-center spending is recovering and separating out the noise of how tariffs boosted PC sales. Analysts pointed to a second straight quarter of growing PC shipments, prompted by fears of higher tariffs down the road as a relevant factor.
“We expect Intel to print upside to Q3, while taking a defensive competitive tone and touting its silicon breadth,” Ramsay said. “Q3 should be strong on PCs, but what about the back side of this inventory build?”
What to watch for
continues at marketwatch.com
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