Hello, everyone! This week, we’ll be focusing on Intel Corporation $Intel(INTC.US)$ to analyze the latest trends and scrutinize the company’s recent market movements.
What’s new?
On April 3, 2024, Intel shares fell 8% after the company released long-awaited financials for its semiconductor manufacturing business, commonly known as the foundry business, in an SEC filing.
As part of its strategy to manufacture chips for other companies, Intel introduced a new financial reporting structure that includes their burgeoning foundry business.
The foundry business recorded an operating loss of $7 billion in 2023 on sales of $18.9 billion, which is a wider loss than the $5.2 billion reported in 2022 on $27.5 billion in sales.
This is the first time Intel has disclosed revenue figures for its foundry business separately, highlighting its objective to boost profitability in this segment.
The company has cited previous strategic choices and the sluggish uptake of extreme ultraviolet (EUV) lithography, essential for manufacturing cutting-edge chips, as key factors behind the foundry’s lack of profitability.
Under the leadership of CEO Patrick Gelsinger, Intel has been pitching a plan to investors to continue producing its own processors while launching an external foundry business to supply chips to other companies.
The company predicted that its foundry's losses would reach a peak in 2024 and eventually break even "midway" between this quarter and the end of 2030.
Intel's status as one of the only US companies undertaking cutting-edge semiconductor manufacturing within the US helped the company secure nearly $20 billion in CHIPS and Science Act funding last month.
Taiwan Semiconductor Manufacturing Co. (TSMC) is currently the leader in the foundry market, eclipsing Intel in total revenue. In 2023, TSMC reported impressive sales of $69.4 billion and a net income of $26.9 billion. Furthermore, TSMC’s sales are expected to grow by 20% in 2024, reaching an estimated $83.4 billion.
Chart of the day
Trend analysis:
1. Intel (INTC) experienced an upward trend starting in late October 2023, with the stock price up by over 50% by year-end.
2. A price correction occurred at the beginning of 2024, but the counter-trend movement lasted for approximately three months, indicating market hesitation and the potential for a price reversal to the downside.
3. INTC broke out below a rectangle-like formation and declined for three consecutive days after the company released long-awaited financials for its semiconductor manufacturing business.
Technical indicators:
INTC has dropped below the 200-day moving average (MA200), indicating a potentially weak performance in the mid-term.
The trading volume has been above its 10-day moving average for three consecutive days, with the price declining, signaling a negative short-term outlook for bulls.
Momentum oscillators, such as the moving average convergence/divergence (MACD), were negative, showing a bearish crossover below the zero line.
The 4-hour chart indicates that the relative strength index (RSI) and the KDJ indicator are both signaling that the asset is in overbought territory. There are no immediate signs of buying opportunities. This implies that it might take a while before we see a price recovery in the short term.
Next move?
INTC is currently trading in a descending channel and a 5-month low, indicating the potential for further dips.
The MA200 will be closely watched as a barometer of mid-term market sentiment. The longer the price trades below the MA200, the higher the likelihood of a bear market.
This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve.
All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
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