Intel Corporation’s latest announcement regarding its server chip products has caused a significant surge in the company’s stock price. According to Executive Vice President Sandra Rivera, Intel will introduce a new server chip, complete with more computing cores, using an advanced production technique that will come sooner than anticipated. As a result, the stock rallied by 7.6% immediately after the announcement.
Intel CEO Pat Gelsinger has made it a priority to regain technological leadership in the server market, which has been one of the most profitable areas of the business. Under its previous leadership, the company lost significant market share to its competitor, Advanced Micro Devices Inc. Additionally, some of Intel’s key customers, such as Amazon.com Inc.’s AWS, have started creating their own chips, further reducing Intel’s revenue and profits. Server processors are the backbone of corporate networks and the massive data centres that power the internet, making them an essential element of Intel’s business.
The new chip, known as Sierra Forest, will come equipped with 144 processing cores and will be tailored for cloud-computing workloads. Intel has already begun sending Sierra Forest samples to customers, with plans to start shipping the chip in the first half of 2024, according to Rivera.
The shift to the 18A process technology is a significant positive for Intel, says Susquehanna Financial Group analyst Christopher Rolland. Intel’s shares rose by $2.23 to $31.52, the company’s most significant one-day gain since November. Despite being up by 11% in 2023 through Tuesday, Intel’s stock had been trailing behind other chipmakers’ gains.
Looking at INTEL Price action, one cannot fail to notice that the stock’s price this year has flattened and traded in a range between $24.43-$31.17 after trending lower for a considerable period of time last year – price traded below the key moving averages 20 (blue) 50 (red) and the 200 (green). Price managed to carve out a classic chart pattern known as the rectangle pattern which traders interpret as a neutral pattern signalling that price will probably advance lower or higher in the future. But until we have a clear breakout, one must be patient and continue monitoring price for confirmation. Finally, what’s also interesting is that price managed to move above the 200MA at $30.00 after yesterday’s news; is this an early sign that bulls are becoming aggressive and ready to push price higher? Will there be more demand for this stock? Time will tell.