What's Wrong With Intel Stock Today?

Intel reports fourth-quarter earnings after the market close today, and the only serious news on the table is actually positive. So why is the stock tanking?

Jan 16, 2014 at 2:00PM

Intel (NASDAQ:INTC) shares have been rising ahead of tonight's earnings report. In two days this week, the chip giant rose 4.6% while the Dow Jones Industrial Average (DJINDICES:^DJI) only gained 1.4%. Intel shares set a fresh 52-week high yesterday, reaching levels not seen since summer 2012.

INTC Chart

INTC data by YCharts

But then, Intel investors suddenly shifted into reverse. Intel is one of the Dow's worst performers today, dipping as much as 1.1% overnight and still down by 0.4% just before 2 p.m. The momentum heading into Intel's fourth-quarter report after the closing bell is suddenly kaput.

The only significant news out of Intel is actually a positive note. Intel has been building a state-of-the-art chip manufacturing facility in Arizona, and just announced that the opening will have to wait a while.

The building is complete, fully powered, and air conditioned, but Intel won't install any manufacturing tools right now. Intel's existing factories are only running at 80% of capacity, so why pour money into another plant when other sites can handle the current load with room to spare? Holding back the equipment orders will save Intel about $3 billion in capital expenses.

Yes, that still means that Intel has spent $2 billion to build a mostly empty structure in the Arizona desert. But those charges are already on the books, and Intel can always finish the installation later. For now, the company tapped the brakes until the global PC market picks up again -- or until Intel strikes out into new markets that require sophisticated chip-building facilities.

So it's a delayed capital expense, set to drive Intel's free cash flow higher than expected over the next couple years. It's not a complete victory, given the signals Intel is sending about a slow PC market recovery. But all things considered, it doesn't make sense to punish Intel's stock based on this news.

A more likely explanation for today's price action is that Intel investors are taking some profits off the table, just in case tonight's report doesn't support those 52-week highs. Nervous investors might want to slap a protective collar on their Intel holdings. Me, I'm happy to ignore earnings-week jitters and keep my eye on Intel's long-term prospects instead.

3 stocks to own forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today -- and they include a household name from the tech sector! Just click here now to uncover the three companies we love.

Fool contributor Anders Bylund owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information