Intel Corporation (NASDAQ:INTC) has seen some wild trading recently, and frankly, it drove me nuts. Of course, just as soon as Intel stock looked to reassert itself following an outstanding fourth-quarter earnings report, it happened. The Dow Jones crashed, sending the broader markets into panic mode. INTC is back to square one.
And by square one, I mean literally.
On December 7, I warned that Intel stock was going to experience some choppy weather. I was right about that. Shares jumped sharply in the middle of the month, but quickly fell to ring in the new year. But after a strong showing in Q4, the fundamentals appeared destined to take over.
That part of the story didn’t happen, at least not yet. Intel stock closed Tuesday’s session at $44.91, about 5% higher than my December 7 warning. Technically, that’s still a win. But given the dramatic whipsawing we’ve witnessed in the Dow, I think INTC will get caught in the crossfire.
I’m also concerned that related companies register the same strange, pensive trading patterns. For instance, Micron Technology, Inc. (NASDAQ:MU) shares have been largely flat since the end of November 2017. Rival Advanced Micro Devices, Inc. (NASDAQ:AMD) is locked in a declining trend channel in place since February of last year.
While INTC stock will of course ultimately trade on its own merits, the semiconductor industry looks shell-shocked. Any objective analysis will likely reveal that the iconic chipmaker has more downside risk than upside potential.
How then should investors respond?
INTC Focuses on Fundamentals
I’m not opposed to the idea of skimming some profits off the table as a protective exercise. Rule number one in the markets is to never get emotional about your investment: Buying and selling helps ensure that you’re not getting in too deep with INTC stock.
Also, I’m not sure what to make of the chaotic trading patterns we’ve seen since late October last year. History tells us that chaos typically signifies fear, and obviously, there’s a lot of that going around. If I’m a betting man, I expect Intel stock to move lower for the next few weeks.
At the same time, I wouldn’t risk staying out of INTC stock for too long. On Monday, Qualcomm, Inc. (NASDAQ:QCOM) fell sharply on rumors that Apple Inc. (NASDAQ:AAPL) will seek a new chip supplier. The two have been locked in a bitter legal dispute. Apple contends that Qualcomm overcharges for its chips, and reneged on a $1 billion rebate payment.
It’s never good to watch two entities go at it, unless you stand to benefit. That’s exactly the situation INTC finds itself. According to further speculation, Intel chips and components meet Apple’s requirements for its next-generation smartphones. Moreover, Intel can offer better pricing.
If confirmed, the news would catapult Intel stock. But to the company’s credit, they’re not waiting around for those rumors. Recently, Intel gave the world a first glimpse at their new smartglasses called Vaunt. From all angles, the Vaunt is what Alphabet Inc’s (NASDAQ:GOOG,NASDAQ:GOOGL) Google Glass should have been: clean, comfortable, and won’t make you look like what The Verge contributor Dieter Bohn calls a “glasshole.”
And if pricing speculation is correct, INTC will offer the Vaunt at $130, comparing favorably to Google Glass’s $1,500.
INTC Immersed in Next-Gen Tech
I have big hopes for Intel stock, especially if they can truly offer the Vaunt at reasonable prices. This would immediately make smartglasses a viable technology, and not just a gimmick for the rich.
Again, if I was a gambling man, I’d put down a wager on that pricing. Lately, INTC has been forging a reputation for bringing next-generation technology to the masses. It will have a chance to further its street cred when it showcases a variety of innovations at this year’s Winter Olympics.
One of the most anticipated events is Intel’s broadcasting of the tournament in virtual reality, an Olympics first. The chipmaker will also demonstrate 5G network capacity, and advanced drone footage.
Undoubtedly, Intel stock faces tough nearer-term challenges that could scare off weak-handed investors. However, I wouldn’t let any of this noise detract you from the bigger picture. INTC has far too many positives going for it to simply ignore.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.