Trade Idea

Below are some thoughts on a potentially interesting trade set-up that is forming.

Intel (INTC) shares have plummeted nearly $20 following its Q4 earnings report. While the company delivered a beat on both revenue and EPS, the results were overshadowed by a cautious Q1 outlook. This guidance highlighted persistent supply constraints and margin pressures linked to Intel’s ongoing manufacturing transition.

Financials

Q4 Revenue: $13.7B (Beat)

Q4 Non-GAAP EPS: $0.15 (Beat)

Q1 Revenue Guidance: $11.7B – $12.7B

Non-GAAP Gross Margin: Slipped to 37.9%

Management expects available supply to trough during the current quarter, which is weighing on short-term sentiment.

Bull Case & Setup

IMO, the long-term bull thesis for Intel rests on three strategic pillars:

1. The 18A Roadmap: Reclaiming transistor leadership through the 1.8nm node, representing Intel’s first real chance to leapfrog competitors in process technology in a decade.

2. The De Facto “Western Foundry”: Positioning as the premier U.S.-based manufacturing alternative, reinforced by the historic 9.9% equity stake held by the U.S. Government.

3. Cyclical Tailwinds: Capitalising on the dual demand of the Server CPU refresh and the massive AI PC hardware cycle.

Despite the immediate post-earnings volatility, the “on-shoring” narrative remains a structural trend. As global demand for high-end domestic foundry capacity grows, Intel’s role as a national champion provides a unique valuation floor that few other semiconductor plays can claim.

A fundamental snapshot does not reveal INTC to be especially cheap (see below), but the bottom line is expected to grow significantly and a surprise Apple announcement could cause a material upward revision of estimates.

Source: Koyfin

Technicals

From a trading perspective, tomorrow marks Day 3 post-earnings, often a turning point for institutional ‘washout’ selling (the 3-day rule). Notably the ATR has been much higher than usual at 6.86% for the last 14 days versus the 100 day average of 3.91%.

The stock is currently approaching its 50-day SMA ($40.13). It is within one ATR of the SMA 50. This level represents a potential area of interest to initiate a long, using a definitive break below the 50-day SMA as a logical stop-loss to manage risk.

I have no position yet, but I am very tempted to initiate one in my trading account should it come in a little more towards the $40 zone. Conversely, I may wait to see if it can consolidate for a short period, but given the whipsaw market we find ourselves in, it often pays to act quickly.

As always, not financial advice just a potential set-up I am watching!

---

Thank you for reading and see you for the next one!