Intel Earnings Preview: Poised to Set the Tech Sector's Pace


Can Intel (INTC) keep up the earnings momentum?

That's the question investors will want answered Tuesday when the tech bellwether reports its second-quarter earnings results. All signs point to a strong showing, which would offer further evidence that U.S. companies -- and tech firms in particular -- are continuing to emerge from the recession.

In April, Intel reported first-quarter results that it said were the best in its history for that period.

Analysts are expecting Intel to report earnings of $2.4 billion, or 43 cents per share -- up from a loss of $398 million during the worst of the recession last year -- on revenue of $10.3 billion. That would mirror the company's first-quarter results during the historically soft second quarter.

Is Tech Spending Back?

A strong performance by Intel would suggest that consumers and businesses continue to ramp up their tech spending, a key precondition for a broader economic recovery. Many businesses have been sitting on the sidelines, waiting for economic conditions to improve before they upgrade their computer systems.

"While PC upgrades may be deferred, they cannot be eliminated," Piper Jaffray analysts Gus Richard and Jennifer Baxter wrote in a note to clients. "Intel's competitive position is as strong as it has ever been and the company is well-positioned to benefit from a corporate PC upgrade cycle and growth from emerging market consumers."

The analysts reiterated their overweight rating on the stock. "We believe that Intel remains in the early innings of a corporate upgrade cycle and new demand from growing global middle class in the emerging economies," they wrote.

If Intel offers a strong report, that will set the tone for other chipmakers, like Advanced Micro Devices (AMD) and Texas Instruments (TXN), as well as the broader tech sector.