Shares of Intel fell 10% on Friday, a day after reporting disappointing third-quarter results. Jared Blikre breaks down the stock’s price action, and discusses what the state of chipmaker means for the rest of the industry.
Video Transcript
SEANA SMITH: You mentioned the underperformance that we’re seeing in the Dow. Of course, that is tied to what you were saying in terms of Intel and American Express, those two stocks under a significant amount of pressure today. Intel, we covered that after the bell yesterday.
Their headline numbers actually came in pretty much in line with expectations, slightly better than what the Street was expecting, but we’re seeing that stock tank today. A lot of that has to do with weakness in the data center business. I know we’re going to talk a little bit more about that in a minute or so.
But also, American Express, the disappointing results there. I think the big takeaway is just the weakness that we’re seeing in consumer spending. And we’ve been hearing this from analysts before in regards to American Express. I don’t think this was a huge surprise that we’re seeing American Express underperform with some of its peers.
And that, of course, is just because of their close association with air travel and also entertainment, two areas– two industries that have basically been shut down or are operating at less than half of their capacity here over the last several months. So American Express continues to be under pressure today, and those two stocks are really the reason why we’re seeing the Dow in the red right now with just an hour to go.
And Myles, real quick, I just want to call out what we’re– what we’re seeing from Gap today. I mean, it isn’t a huge mover. The stock is right around the flat line. But I think it just highlights the challenge that’s ahead for a lot of these huge retailers.
So Gap coming out saying that it’s going to close a third of its stores by 2024, so that’s just four years from now. So it really highlights just the shift in consumer behavior, more and more people are spending online. Huge retailers like Gap are having to adjust their business. We know some of these adjustments were underway ahead of the pandemic, but once again, the pandemic accelerating some of these changes and these big businesses making these tough decisions now.
MYLES UDLAND: I think it was Jeff Macke yesterday saying there was a time when the Gap was bragging about having multiple stores in every mall, and now, of course, they’d like to have pretty much no stores in any mall. And Seana, you mentioned Intel. We brought it up at the top of the show. I want to turn to Jared Blikre now for a bit more.
Jared, on that story, you broke the earnings for us last night. Obviously, a huge mover in the Dow, but there’s also kind of a macro chip story here with Intel, and you see what’s happening with some of the other major semis, Nvidia, AMD. It really is kind of watching one half of the chip business kind of go wherever Intel thinks it’s going versus, you know, Nvidia and AMD, which certainly investors believe are the future.
JARED BLIKRE: Yeah, what– well, what Intel takes away, I guess they give to AMD and Nvidia, because they have just really underperformed. And as you remember, I broke the earnings yesterday. I wasn’t able to fix them, and that’s why the stock is down 11% today.
I was concerned about the 7-nanometer space that they have not been able to get into. There was a delay that they reported last quarter. Stock was down 16% that day, down 11% this day. I did have the chance to talk to a couple of analysts about it, and they both said it could be a positive for the stock because they’re going to possibly outsource it. So maybe they can get back to basics and fix their issues with the data center.
But you look at the heat map here, yeah, Intel’s under pressure, 11%. If we look at it year-to-date, it’s kind of the opposite of AMD here. If you take a look at some of the other performance– excuse me. If you take a look at some of the other performers here, we’ll take a look at AMD, 77%.
And then you also look at what’s happened with something like Micron, it’s become a bifurcated space. Memory is a little bit weak, and Intel does have some exposure there still. They’re probably going to offset or get rid of their NAND division. But overall in the chip space, it’s winners and losers, much like retail and everything else in the COVID experience.
