Intel Stock Buries the Chip Sector With Dismal Guidance

INTC is weighing on the rest of the chip sector today

Managing Editor
Jan 26, 2024 at 10:46 AM
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The tech-heavy Nasdaq is the only major index swimming in red ink this morning, and Intel Corp (NASDAQ:INTC) is to blame. The semiconductor stock is down 11.7% to trade at $43.85 at last check, on track for its worst single-session drop in over three years. Intel reported fourth-quarter earnings and revenue that topped estimates, but a first-quarter revenue forecast that came well below expectations is driving the plunge.

Demand uncertainties triggered the bleak guidance, prompting 10 price-target cuts and one downgrade to "hold" from "buy" at Needham. Jefferies and Benchmark zigged while the rest zagged, hiking their price targets. The report has sent shockwaves through the chip sector, with Advanced Micro Devices (AMD), NVIDIA (NVDA), and Micron (MU) all down 2% or more. 

Intel stock hit an annual high of $51.28 on Dec. 27, and finished 2023 with an over 90% gain. Now, the shares are testing their 80-day moving average and are on the short-sale restricted list. Life comes at you fast on Wall Street. Year-over-year, INTC is 45% higher. 

Call traders are likely caught off guard by the drawdown. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put  volume ratio of 3.69 sits in the 83rd percentile of its annual range. So not only do calls outflank puts by a nearly 3-to-1 ratio, but the elevated percentile indicates a healthier-than-usual appetite for long calls relative to puts on INTC during the past two weeks.

While calls still outflank puts today on an absolute basis, the number of puts traded is 12 times the average intraday amount. Leading the charge is the weekly 11/26 43-strike put, while the 43.50-strike in the same series is also seeing new positions bought to open.


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