Intel Stock Extends Rally After Bullish Earnings and Outlook

Intel Corporation (INTC) shares rose more than 8% during Friday's session after the chip giant posted better-than-expected fourth quarter financial results after Thursday's close. Revenue rose 8.3% to $20.21 billion, beating consensus estimates by $980 million, and GAAP net income rose to $1.58 per share, beating estimates by 35 cents per share.

Strong client computing and data center revenue helped offset Internet of Things (IoT), non-volatile memory, and programmable solutions weakness. The chip maker expects 2020 revenue to hit $73.5 billion with net income of $5.00 per share and 33% operating margins. 

Analysts had a mixed reaction to the fourth quarter results. Cowen & Co. raised its price target on Intel shares from $55 to $64, citing the potential for strong PC and server demand along with capacity-constrained mix to drive margin and revenue upside. Loop Capital downgraded Intel stock from Hold to Sell but raised its price target from $50 to $59, citing potential headwinds in 2020 from challenging PC market conditions and pressure from Advanced Micro Devices, Inc. (AMD).

From a technical standpoint, Intel stock broke out from a rising wedge pattern to fresh 52-week highs. The relative strength index (RSI) moved further into overbought territory with a 84.81 reading, but the moving average convergence divergence (MACD) extended its bullish crossover. These indicators suggest that the stock could see some near-term consolidation but that the intermediate-term trend remains bullish.

Traders should watch for some consolidation above trendline support near $62 before an extended move higher. If the stock breaks down from those levels, traders could see a move to retest support levels of $59.50 or the 50-day moving average at $58.82, although that scenario appears less likely to occur given the strong fourth quarter financial results and outlook for 2020. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.