Intel (INTC) will report earnings in today’s postmarket after a sharp +61.6% rally since Mar. 30 added further strength to an already impressive year. Shares closed at 65.27 yesterday for a +234.6% gain during the past 52 weeks and are only modestly down from the all-time high of 70.33. However, analysts are looking for numbers notably below last year, with estimates for EPS coming in at $0.01 against $0.13 last year (-92.3%) and revenue of $12.28B vs. $12.67B year-over-year (-3.1%) due to severe supply chain limitations and high manufacturing costs in the short term.

Intel enjoys a unique position as the only U.S.-based company that both domestically designs and manufactures high-end computer chips, as evidenced by major investments from the U.S. government and Nvidia (NVDA) last year to bolster supply chains of these critical products. The market also faces voracious commercial appetite for artificial intelligence-driven computing hardware, not to mention the issues of the lengthy time horizon and the extraordinary level of difficulty and complexity other companies would face trying to make their own domestic foundries. These factors have contributed to the extreme investor interest and a huge resurgence for this once-beleaguered former king of the semiconductor sector.

However, some analysts seem to think the move may be overdone. Wedbush, for example, yesterday said the stock “has gotten ahead of reality.”  The report said that Intel’s most recent semiconductor manufacturing technology (the 18A and 14A process nodes) have not yet proven to be competitive and that the company needs to attract more external business. Additionally, the report said that the A.I. supply crunch for server CPUs is not as challenging as other areas like memory chips, which could mean less pricing power for companies like Intel. RBC Capital Markets expressed similar concerns earlier this week in its own analyst report, which said “the stock appears to be largely trading on foundry optimism” and that the current valuation “leaves little margin for error.”

Conversely, a ValueWorks report yesterday showed the outlook that Intel will post much higher growth rates than the Street expects. The analysts’ reasoning is the A.I. boom could last several more years and that Intel still trades “at a huge discount to other chip manufacturers” in terms of forward price/sales numbers. HSBC also painted a more optimistic picture with an upgrade on Apr. 21, boosting its price target to $95 from $50 and upping its rating to Buy from Hold. BNP Paribas gave its own, albeit more modest, upgrade the same day with a price target bump to $60 from $34 and a Neutral rating changed from Underperform.

The chart shows price pulling back from the highs, but holding on to the recent lows around 65. A steep upward trendline beginning near the Mar. 30 lows has been broken and price no longer shows a directional bias as earnings loom. Further lows near 62 as well as an old high/subsequent gap at about 54.60 to 53.27 stand out as potentially supportive areas. To the upside, the highs of 70.33 are the obvious point to watch, but things are trickier beyond that as there is no prior price history to work with. The yearly +2 Standard Deviation Channel could provide one area to watch, currently coming in at 78.11 based on yesterday’s close.

The options market also could provide some insight about the market’s expectations for further upside. Tomorrow’s Apr. 24 expiration shows a potential expected move of +/-5.8 (about 8.7%), which projects a possible boundary well above the old highs. Meanwhile, the monthly May 15 expiration gives a potential move of +/-10.8 (roughly 16.3%), the highs of which come in about a dollar below the +2 SDC while the lows roughly align with the gap level from Apr. 8.

Morning Minute

Tune in live from 8 a.m. to 5 p.m. ET, or anytime, anywhere, on‑demand.

Or stream it via thinkorswim® and thinkorswim Mobile, available through our broker-dealer affiliate, Charles Schwab & Co., Inc

Please do not reply to this email. Replies are not delivered to Schwab Network. For inquiries or comments, please email [email protected].

See how your information is protected with our privacy statement.

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.