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Stock Market News: Intel Jumps, Amazon Sinks as Earnings Onslaught Continues

By Dan Caplinger - Oct 25, 2019 at 11:55AM

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Markets moved higher on Friday morning.

Major benchmarks were on the rise Friday morning, and earnings were once again in the spotlight. Investors won't see a busier week of earnings reports before the end of 2019, and overall, sentiment in the financial markets has been relatively strong. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (^DJI -0.25%) was up 190 points to 26,995. The S&P 500 (^GSPC -0.10%) climbed 15 points to 3,025, and the Nasdaq Composite (^IXIC -0.13%) was higher by 52 points to 8,238.

Among those companies making shareholders happy, Intel (INTC 0.22%) came out with positive results that sent its stock sharply higher. However, Amazon.com (AMZN -0.44%) wasn't quite as lucky, as investors weren't entirely comfortable with its latest results.

Intel chips away at the competition

Shares of Intel jumped 8% after the semiconductor chipmaker announced its third-quarter financial results. Investors were generally pleased that the tech giant held up as well as it did, as they have expected to see much stronger headwinds than what actually materialized.

Room with six chairs, blue lighting, and Intel logo on the wall.

Image source: Intel.

On their face, Intel's numbers didn't look all that good. Revenue was flat from year-ago levels, and adjusted net income fell 3% year over year. Weakness in the PC-centric segment sent sales there down 5% and weighed on overall performance.

However, investors liked what they saw from Intel's data-centric businesses. Sales gains were particularly large in the memory segment and in Intel's Mobileye autonomous driving business, and healthy performance from the Internet of Things was also a factor in helping keep the company's top line steady.

Intel still faces some big challenges, especially with tariffs holding back parts of its business. Nevertheless, shareholders seem optimistic that the chip giant is finding its way past its legacy PC-based business toward a brighter future.

Amazon sees more spending ahead

Meanwhile, shares of Amazon.com were down 2%. Growth from the e-commerce and cloud giant was strong on the top line during the third quarter of 2019, but shareholders weren't happy with falling profit.

Total revenue at Amazon jumped 24% from the year-ago period, coming in at the high end of what investors had expected based on previous company projections. However, earnings fell sharply year over year and were even weaker than most had predicted.

The big problem that Amazon faces is making good on its promise of one-day delivery to its Prime customers. Operating expenses jumped 28% in North America as the e-commerce retailer made the transition from two-day shipping. CEO Jeff Bezos was adamant that he believes one-day shipping is "the right long-term decision for customers." He pointed to billions of items in orders already, and the service is sure to be a hit during the upcoming holiday season.

Investors don't seem thrilled at the prospect of having to wait even longer for Amazon to generate consistent profit growth. Having gone for years without seeing any profit at all, many had thought the days of bottom-line weakness were behind them. Amazon's latest strategy makes it clear that shareholders need to get used to the idea of profit margin pressure for the foreseeable future.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Intel and recommends the following options: short January 2020 $50 calls on Intel. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
INTC
$35.86 (0.22%) $0.08
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$141.47 (-0.44%) $0.63
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,896.30 (-0.25%) $-80.65
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,269.63 (-0.10%) $-4.41
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$12,921.70 (-0.13%) $-16.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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