Investors were quick to recover from weakness in the stock market earlier this week. The Nasdaq Composite (^IXIC 2.26%) was the big beneficiary on Friday afternoon, rising more than 1.5% as of 2:30 p.m. EDT and approaching all-time record highs.
Earnings are driving a lot of the excitement within the investment community on Friday. One industry that doesn't always get much attention from Nasdaq investors is the financial sector, but one hot prospect in banking gave investors a nice surprise. Meanwhile, semiconductor stocks generally performed well, but Intel (INTC -10.15%) wasn't able to join its peers after its quarterly report left shareholders with some unanswered questions.
Bank on SVB
SVB Financial Group (SIVB.Q 20.00%) was a big winner on the Nasdaq Friday, rising 10% in mid-afternoon trading. The parent company of Silicon Valley Bank had a strong financial report that raised hopes for a full recovery for the U.S. economy and the tech industry in particular.
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SVB Financial reported a 37% rise in net income during the first quarter compared to the year-ago period. Average loans jumped 11.5% during the quarter, while total client funds were up more than 16% on a nearly 20% rise in deposits on SVB's balance sheet. SVB saw gains both from net interest income and from fee-based charges.
CEO Greg Becker called the period SVB's best quarter ever, pointing to continued growth and profitability, and improving economic outlooks for future gains. Becker dramatically boosted SVB's expectations for 2021 growth, and the bank has aggressively raised capital to give it the ability to take advantage of expansion opportunities to broaden the scope of its business.
SVB Financial's geographical proximity to Silicon Valley has always given it outsized exposure to the innovation economy. As long as tech companies are moving full speed ahead, SVB should be able to participate in their success.
Intel has a chip on its shoulder
Intel, however, didn't fare as well. After releasing its first-quarter financial results, the chipmaker's stock was down almost 6% on Friday afternoon.
Intel's numbers showed a mixed picture. Revenue was flat from year-ago levels on an adjusted basis. Substantial gains in the client-computing, Internet of Things, mobility, and programmable solutions areas were offset by a 20% drop in segment revenue from the data center group. Adjusted earnings were down 1% year over year. Both sales and earnings figures were better than the company's guidance from January.
Unfortunately, even upgraded guidance from Intel didn't paint a very pretty picture. Intel still sees adjusted revenue moving lower by 1% in 2021 despite a $500 million boost in its projected top line. Similarly, a $0.05 per share boost to earnings figures to $4.60 per share still leaves Intel's bottom line down 10% from 2020 levels.
Intel has been under pressure for quite a while despite an increasingly favorable environment for semiconductor chip manufacturers broadly. The fact that other companies in the industry saw their share prices rise substantial points to the ongoing troubles that Intel has -- and the potential for its rivals to take over Intel's business slowly but surely as time goes on.
