Intel Earnings Preview: Heightened Volatility Makes This Stock Ripe for Options Traders
Intel (INTC) is scheduled to report fourth-quarter fiscal earnings tomorrow after the market close. A conference call with corporate leadership will follow the earnings call and is scheduled for 5:00 p.m. EST.
The chipmaker’s performance ahead of earnings has not been inspiring, with the stock losing nearly 5% of its value for the week as of yesterday. That follows a 3% drop last week.
A broad-based sell-off in semiconductor stocks was underway after a Chinese-based artificial intelligence company released DeepSeek-R1—a model that can apparently match the performance of Western AI models at a fraction of the cost while using older hardware.
The news undeniably affected Intel’s stock price. However, Pat Gelsinger, the former chief executive officer of Intel, argued that “the markets are getting it wrong,” referring to the expectation that DeepSeek would lead to a reduction in demand for semiconductors.
One potential upside that could come via the DeepSeek news is the need for less-advanced hardware to run models. Typically, AI models use graphic processing units (GPUs), but Intel’s business focuses mostly on central processing units (CPUs). The need for fewer GPUs may benefit Intel if the prevailing narrative around DeepSeek plays out. Still, Intel has made plans to capitalize on the AI rush, although it is admittedly in a poor position to do so.
Investors may press leadership on the ramifications during the conference call. If they could lay out a solid thesis for why this is a positive development for the company, it could translate into some buying.
Analysts anticipate Intel’s earnings per share (EPS) will cross the wires at $0.12 for the fourth quarter. That would be down from $0.54 reported a year ago. Revenue is expected to come in at $13.8 billion, which would compare to $15.41 billion a year ago.
In the preceding four quarters, Intel has beaten EPS and revenue estimates only two times.
Analysts are generally neutral on Intel stock, with 36 hold ratings and only three buy ratings. There are seven sell and strong sell ratings on the stock, according to TradingView. The average one-year price target stands at 23.75, representing a 20% gain over the next 12 months from yesterday’s 19.84 stock price.
Intel currently trades with an implied volatility rank (IVR) of 81, meaning volatility is elevated compared to the past 12 months of trading. That said, the elevated IVR makes options strategies for an earnings play potentially more attractive. The expected move for earnings based on the options market was +/- 1.8 points, or 9% of yesterday’s stock price. That is on the upper range of the expected moves for companies in the S&P 500.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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