• Investinq
  • Posts
  • 🚨Intel Considers Splitting up?

🚨Intel Considers Splitting up?

+ Earning's Roundup Of Lululemon, Ulta, And Crowdstrike

August 30, 2024

Good afternoon! Warren Buffett, the iconic investor who’s been making Wall Street waves since he was 11, celebrates his 94th birthday today. Over the years, Buffett has taught us some unforgettable lessons on investing. From holding onto cash when the market gets rough to knowing when to pivot, Buffett’s approach is all about keeping it simple and sticking to what you know. His mantra? Buy great businesses with solid fundamentals, not just flashy CEOs.

Buffett’s track record speaks for itself. Under his watch, Berkshire Hathaway ($BRK.B) has soared to a $1 trillion valuation, with returns far outpacing the S&P 500 over the past 40 years. He’s made a career out of finding value where others don’t and letting the power of compounding work its magic. So, on his 94th, let’s raise a glass (of Coke, of course) to Buffett’s investment wisdom: Stay patient, stay focused, and always think long-term.

MARKETS

*Stock data as of market close*

  • The stock market ended a turbulent August on a high, with investors cheering as fresh inflation data boosted hopes for a September rate cut. The Dow Jones ticked up 0.55%, hitting yet another record, while the S&P 500 and Nasdaq climbed 1.01% and 1.13%, respectively. The Fed’s favorite inflation metric, the personal consumption expenditures price index, rose just enough to keep everyone optimistic but not worried.

  • While August was anything but calm—starting with growth fears and a mini-selloff—investors came around to the idea that the economy might be landing softly after all. The Dow and S&P 500 chalked up another month of gains, but the Nasdaq couldn’t quite shake off a rough patch for tech stocks. In the end, it’s a mixed bag, but one that leans bullish as we head into September.

STOCKS
Winners & Losers

What’s up 📈

  • MongoDB ($MDB) surged 18.34% after surpassing earnings and revenue estimates for the second quarter and raising its full-year forecast.

  • Marvell Technology ($MRVL) climbed 9.16% after announcing higher-than-expected revenue projections for the fiscal third quarter.

  • Intel ($INTC) gained 9.49%, benefiting from the upbeat sentiment in the semiconductor sector, spurred by Marvell Technology's optimistic revenue forecast.

  • Affirm Holdings ($AFRM) was up 5.64% after topping fiscal fourth-quarter revenue estimates and reporting narrower-than-expected losses per share. CEO Max Levchin called it a "killer quarter" during the earnings call.

  • Dell Technologies ($DELL) rose 4.33% after posting better-than-expected second-quarter results and raising its full-year outlook, driven by increased demand for its AI-powered servers.

  • GameStop ($GME) rose 8.88%

  • Broadcom ($AVGO) inched up 3.75%

  • Amazon ($AMZN) increased 3.71%

What’s down 📉

  • Elastic ($ESTC) plunged 26.49% after its fiscal second-quarter revenue forecast missed Wall Street’s expectations. The artificial intelligence search company now expects revenue for the period to come in between $353 million and $355 million.

  • Alnylam Pharmaceuticals ($ALNY) dropped 8.47% despite reporting positive Phase 3 results for its heart disease drug vutrisiran, sold under the name Amvuttra. The results were disappointing to investors, leading to the sell-off.

  • Ulta Beauty ($ULTA) decreased 4.01% after the beauty retailer’s shares fell following its first earnings miss in four years. Ulta also trimmed its full-year guidance after a decline in same-store sales last quarter.

  • Five Below ($FIVE) slipped 3.59% after Dollar General issued a cautious outlook on consumer spending.

  • Astera Labs ($ALAB) fell 10.70%.

  • BeiGene ($BGNE) was down 3.39%.

CHIPS
Intel's Wild Ride: Split Decisions and Chip Ambitions

Intel ($INTC) is shaking things up once more. The chip giant is cozying up with its financial wizards over at Morgan Stanley and Goldman Sachs to brainstorm a way out of its current jam. And by jam, we mean a crater-sized challenge, not a pothole. Rumor has it, Intel might be on the verge of splitting its product design and manufacturing arms or even hitting the brakes on some factory projects to keep afloat.

This news sent Intel's stock on a rollercoaster, surging 9.5% to $22.04—its biggest one-day jump since October 2022. That's a welcome lift after watching its stock nosedive nearly 60% over the past year.

What's Intel Cooking Up?

CEO Pat Gelsinger is back in the kitchen, cooking up a potential split of Intel's design and manufacturing divisions—a move that could shake up the entire chip industry. Other menu options include mergers, acquisitions, or dialing down some of those ambitious factory plans. These are tough calls, especially in a market plagued by dropping sales and fierce competition.

Gelsinger's master plan has always been bold: turning Intel into a dual-force, designing and manufacturing chips to compete with titans like Taiwan Semiconductor Manufacturing Co. ($TSM). But with a $1.61 billion net loss last quarter, it looks like Intel might need to pump the brakes on its big dreams—at least for now.

Wait and See

Don’t expect any big announcements just yet. Intel's board won't be making any hasty decisions, with options set to be reviewed in September. So, hold onto those stocks for now—no need for a panic sale just yet.

Still, Intel is feeling the heat. Gelsinger's grand comeback plan hasn't gone off without a hitch, and the foundry business alone reported a hefty $2.8 billion operating loss last quarter. Meanwhile, competitors like Nvidia ($NVDA) are having a field day, doubling Intel’s revenue in 2024 and cashing in on the AI boom.

Looking for the Silver Lining

Despite the storm clouds, Gelsinger remains hopeful, forecasting a return to sales growth by the fourth quarter, thanks to a recovering PC market and some shiny new products. But with skeptical investors and a stock still struggling to bounce back, Intel's path to regaining its glory days looks like a steep climb.

And let’s not forget the guy who bet his grandma’s $700k inheritance on Intel. After a tough year watching his investment plummet, he's finally seeing a glimmer of hope with that 9.5% pop. It’s not quite enough to make up for all those sleepless nights, but hey, it's a start! Fingers crossed his faith in Intel’s comeback doesn’t go unrewarded—grandma’s watching!

NEWS
Market Movements

EARNINGS
Earnings Roundup: Lululemon, Ulta, and Crowdstrike

Lululemon’s Bumpy Stretch

Lululemon Athletica ($LULU) had a rough day, managing just a 0.18% gain despite some hurdles. The athletic wear brand beat Wall Street’s earnings per share estimates by around 8%, but revenue was a different story. The company pulled in $2.37 billion—just shy of the expected $2.41 billion. This marks Lululemon’s first revenue miss in over two years, thanks largely to the lackluster launch of their “Breezethrough” workout pants. Customers weren't feeling the breeze, forcing Lululemon to yank the product from shelves. Adding to the woes, the company also slashed its full-year revenue forecast to between $10.28 billion and $10.38 billion, down from a previous $10.7 billion to $10.8 billion.

Ulta’s Bad Hair Day

Ulta Beauty ($ULTA) had a less-than-glamorous day, with shares dropping 4.01% after disappointing on both earnings and revenue fronts. Ulta reported earnings of $5.30 per share, falling short of the $5.46 analysts were expecting. Revenue didn’t sparkle either, coming in at $2.55 billion against an anticipated $2.61 billion. The biggest shocker was a 1.2% dip in comparable store sales—a far cry from the 8% increase this time last year. CEO Dave Kimbell pointed the finger at fierce competition in the beauty market. With customers being lured away by rivals, Ulta had no choice but to cut its full-year guidance.

CrowdStrike’s Comeback Story

On a brighter note, CrowdStrike ($CRWD) had a solid day, with shares climbing 2.06% following strong second-quarter earnings. The cybersecurity firm posted a 32% jump in revenue year-over-year for Q2, surprising everyone after a massive global software glitch caused about $5.4 billion in damages. Despite the earnings win, the July 19th mishap—which led to millions of Microsoft computers crashing due to a bungled update—forced CrowdStrike to lower its full-year profitability outlook. The company is grappling with hefty costs from the fallout, including discounts to keep customers and a slew of lawsuits. Nevertheless, investors cheered CrowdStrike's resilience, impressed by how quickly the company bounced back.

So, whether it’s stretching to meet revenue targets, fixing a bad hair day, or dodging tech disasters, these companies are certainly keeping investors on their toes.

Calendar
On The Horizon

Next Week

Markets are closed in the US for Labor Day next Monday, giving everyone a long weekend to kick back. But don’t get too comfortable—the shorter work week still brings a handful of key economic reports.

  • Tuesday: We’ll get the final US manufacturing PMI.

  • Wednesday: Keep an eye out for job openings and factory orders data.

  • Thursday: The ADP employment report and weekly initial jobless claims numbers are on deck.

  • Friday: The big one—Friday’s employment report. This is the same report that tanked markets earlier this month. The labor market is a key factor in the Federal Reserve’s interest rate decisions, and another disappointing reading could mean a smaller rate cut when the Fed meets next month.

Earnings

As the calendar flips to September, the pace of earnings announcements cools off dramatically. But there are still a few heavy hitters to watch:

  • Wednesday: Dick’s Sporting Goods ($DKS), Dollar Tree ($DLTR), and Hormel Foods ($HRL) will report.

  • Thursday: Nio ($NIO), DocuSign ($DOCU), and Bowlero ($BOWL)—yes, the publicly traded bowling company.

  • Friday: Genesco ($GCO) and Big Lots ($BIG) wrap up the week.

So, even with a holiday-shortened week, there’s plenty to keep us busy. Enjoy the break, but be ready for a Friday that could shake things up!

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

Check out our latest issues 🎯: https://investinq.beehiiv.com

Join our small yet growing subreddit 🚀: https://www.reddit.com/r/investinq/