Here's Why Intel Could Be a Top Growth Stock in the Long Run
The stock market reacted negatively to Intel's (NASDAQ: INTC) latest quarterly results, with shares of the chipmaker losing nearly 12% following the earnings release. This wasn't surprising considering that the chip giant's third-quarter report didn't tick all the boxes, as its earnings guidance fell short of Wall Street's expectations. Intel expects its fourth-quarter earnings will drop 39% year over year to $0.90 per share, while analysts were looking for $1.02 per share. Investors also took dim view of the fact that the company's long-term spending plan that's supposed to kick-start growth will hurt profitability.
More specifically, Intel's gross margin is expected to drop 6.5 percentage points year over year this quarter. The chipmaker also pointed out that its gross margin will range between 51% and 53% for the next two to three years. For comparison, Intel's non-GAAP gross margin stood at 60.1% in 2019 and 57.6% in 2020. A lower gross margin profile points toward an erosion in Intel's earnings power, so it isn't surprising some investors were quick to sell the stock.
However, savvy investors looking to buy a semiconductor stock for the long run can treat Intel's latest drop as a buying opportunity. Here's why.
Source Fool.com
