Sell Intel (INTC)
INTC fell nearly 7% after reporting earnings Friday, and the stock started today with further losses. Intel’s sales and earnings numbers both beat expectations, but sales of chips for data centers missed expectations. The data center business is not only one of Intel’s largest, but also the one where it was believed to be best insulated from competition.
In addition, mass production of Intel’s newest line of chips has been delayed until the end of next year, and Intel said they may have trouble meeting demand in the second half. Analysts are concerned that the production delays will drive customers to Intel’s competitors.
Analysts have begun lowering their earnings estimates in the wake of the miss, which will create downward pressure on the stock for at least the next few months.
More important, INTC broke through its 200-day moving average Friday, and closed at its lowest level since March. That has created a definitive break in INTC’s uptrend, as well as the stock’s recent sideways range.
After Intel CEO Brian Krzanich resigned in June, I sold half our shares, writing that I was concerned about the company’s future without a CEO, the stock’s big drop, the selling pressure we’d been seeing in the stock even before the CEO news, and a possible downturn in the semiconductor index. However, I held half our shares because INTC was still above its 200-day line and its lows from earlier this year.
That’s no longer true, and the lack of support means more downside is the most likely near-term scenario here. I’m going to Sell the rest of our INTC shares now. I’ll record the sale at tomorrow’s average price.