Intel Next Up for Chipmakers Coming Off Worst Slump Since 2011

(Bloomberg) -- Bears have had the upper hand in semiconductor stocks this earnings season. Intel Corp. hopes to take back control for the bulls.

The world’s second-largest chipmaker, scheduled to announce earnings after U.S. markets close Thursday, is expected to say sales grew for a 10th straight quarter. Any upside would help relieve anxiety in an industry where stocks are mired in their second 10 percent correction in as many months, something not seen since 2011.

Intel Next Up for Chipmakers Coming Off Worst Slump Since 2011

Even after Advanced Micro Devices served up a tonic for battered bulls with strong results Wednesday, Intel has some heavy lifting left to do. The Philadelphia Semiconductor Index is coming off a six-day losing streak, its longest in two years, as companies from Taiwan Semiconductor Manufacturing to Lam Research fueled concern that demand across the industry may be slowing. A better-than-expected forecast from Texas Instruments failed to stem the broad decline yesterday.

The latest rout started in earnest after TSMC, the world’s biggest contract chipmaker, gave a weak second-quarter forecast, highlighting a slowdown in smartphone demand. Apple shares fell to February lows as investors grew concerned its latest products will miss sales targets.

A strong forecast from Intel would help ease concern that demand for chips used in everything from phones to computers and cars remains robust. But with Apple’s own results still in the offing, investors may have to wait for that final piece of the demand puzzle.

AMD surged 12 percent on a bullish sales forecast, helping the group to a 1.4 percent advance as of 10 a.m. in New York. Intel rose 1.6 percent for its second day of gains in six sessions.

Going by the chip giant’s own track record on earnings days, the odds seem to favor bulls, with the stock rising in four of the past five quarters. The company is the biggest member in the Philadelphia Semiconductor Index, making up 9 percent.

Analysts expected Intel to continue to fend off competition and keep its dominance in the personal-computer industry. Any narrowing of margins would validate the view of skeptics, who say it’s just a matter of time before Intel’s continued reliance on PC chips starts to hurt results. To spread out its bets, Intel has ramped up investments in memory chips and semiconductors for artificial intelligence and self-driving cars.

©2018 Bloomberg L.P.