Monitoring Key Chart Levels for Intel Shares

Intel, a legacy chipmaker, experienced a significant drop in its share price during Tuesday’s extended-hours trading session. The company revealed a widening loss and declining sales in its semiconductor manufacturing business, also known as its foundry business. This news caused Intel shares to fall more than 4%.

Financial Performance of Intel’s Foundry Business

The foundry division of Intel reported an operating loss of $7 billion on sales of $18.9 billion in the previous year. This marked a significant increase in losses compared to the previous year, where the unit reported a loss of $5.2 billion on sales of $27.5 billion. The transparency provided by Intel regarding its foundry business is part of CEO Patrick Gelsinger’s strategy to operate the unit more independently and expand its customer base.

Intel has been actively seeking external customers for its foundry business, with Microsoft being one of the notable future clients. The company is also in discussions with other potential customers who have chosen to remain anonymous. This shift towards external partnerships is aimed at diversifying Intel’s revenue streams and leveraging its manufacturing capabilities.

Government Support and Financial Challenges

To support its domestic semiconductor manufacturing efforts, Intel secured $8.5 billion in grants and access to $11 billion in loans as part of the CHIPS and Science Act funding. While this funding provides a significant boost to Intel’s expansion plans, the company still faces financial challenges associated with ramping up chip-making facilities. During its fourth-quarter earnings call, Intel acknowledged the financial pressures involved in achieving process leadership and expanding its infrastructure.

Despite the current losses in its foundry business, Intel remains optimistic about its future prospects. CEO Patrick Gelsinger expects the losses to peak this year and anticipates breaking even by 2030. Gelsinger emphasized that Intel Foundry will drive substantial earnings growth for the company, with 2024 projected as the turning point for operating losses in the foundry business.

Chart Analysis and Key Levels to Monitor

Intel shares have been trading within a broadening wedge formation since March last year, establishing clear support and resistance levels. Following the recent decline in share price, investors should pay close attention to the $39.80 level. At this price point, Intel shares encounter a confluence of support from the lower trendline of the wedge pattern and the 200-day moving average. A breach below this critical level could signal further downside potential, with lower support levels around $33.20.

As of the latest after-hours trading session, Intel shares were down 4.2% to $42.11. Investors are advised to monitor key chart levels closely to assess potential price movements and make informed decisions regarding their investments in Intel.

Conclusion

Intel’s recent financial disclosures regarding its foundry business have impacted its share price, leading to a decline in after-hours trading. Despite the current challenges, Intel remains focused on expanding its customer base and driving growth in its foundry business. By monitoring key chart levels and staying informed about the company’s strategic initiatives, investors can navigate market volatility and make informed investment decisions.

The information provided in this article is for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research and consult with a financial advisor before making investment decisions.

Disclaimer: The author does not own any securities mentioned in this article at the time of writing.

Original Source: Investopedia