Intel Shares Pop After Earnings, 2020 Guidance Impress

Intel's earnings report was spotless and surprising to the upside. the stock reacted in kind.
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Intel shares rose after the chipmaker's earnings easily cleared Wall Street expectations and management guided for a much stronger 2020 than analysts anticipated. 

The stock rose 6.73% to $67.58 a share in postmarket trading Thursday, after having risen 0.94 % in regular trading hours.

Earnings per share for the December quarter grew 19% year-over-year to an adjusted $1.52, beating Wall Street estimates of $1.25. Revenue rose 8% to  $20.2 billion, beating analysts expectations of $19.23 billion. Gross margin rose to 60.1%, beating estimates of 58%. 

Data center revenue grew 19%, "driven by robust demand from cloud service provider customers and a continued strong mix of high-performance 2nd-Generation Intel Xeon Scalable processors," the company said. Data center revenue has been expected to rebound after a rough 2019. 

Management guided for full year 2020 revenue of $73.5 billion, better than analysts estimates of $72.4 billion. The company is looking for adjusted EPS of $5 for the year on an operating margin of 33%, against Wall street's expectation of $4.66 and a margin of 31.9%. Intel expects capital expenditures to be $17 billion, an uptick over 2019's $16 billion and higher than Street forecasts. Free cash flow is guided for $16.5 billion, better than analysts expectation of $16.1 billion. 

"In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” said Bob Swan, Intel CEO. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns." 

The stock has already outperformed the S&P 500 in the past 3 months, with a 21% gain, against a 10% gain for the U.S.' largest index.