Intel Rallies on Strong Sales Guidance

The news was somewhat better than expected, given that some Intel-watchers had merely expected the company to narrow its sales range but maintain the midpoint of its guidance. Still, the market's reception might have been even warmer had Intel pointed to an upside surprise in its core processor business.

Year to date, Intel shares have trailed the performance of the benchmark Philadelphia Semiconductor Stock Exchange Index, befitting the lack of enthusiasm about its growth prospects relative to peers. As of Thursday's close, the stock was down 14% year to date, vs. a decline of 9% for the SOX.

Interviewed earlier Thursday, Erach Desai, an analyst at American Technology Research, pointed out that the second-quarter consensus estimate assumes that a broad basket of chip stocks will show sequential growth of 4.2%. But excluding Intel, the group would show 7.6% growth.

For the year, expected revenue growth of 24.6% for the industry would jump to 32.4% if Intel were excluded, he added.

Meanwhile, recent news from other chipmakers suggests that the quarter is shaping up relatively well, though none has issued a blow-the-lights-out forecast.

In the past few days, Xilinx (XLNX - Cramer's Take - Stockpickr) reiterated its previous quarterly sales outlook (and lifted its gross margin guidance to the high end of the range), while Altera (ALTR - Cramer's Take - Stockpickr) said it expects sales growth at the high end of previous guidance.

Fairchild Semiconductor (FCS - Cramer's Take - Stockpickr) endorsed its previous sales forecast but issued a cautionary note about volatile ordering patterns.