Since the outbreak of the COVID-19 pandemic, technology stocks have been soaring. That’s because people across the world have become more dependent on devices such as mobile phones, computers, laptops, and tablets, among others, to stay functional. Many countries are announcing…
more stimulus packages to support their economies, and enable people to limit their activity in the second wave.
The S&P 500 and the Nasdaq Composite indexes have recorded a year-to-date increase of 12.6% and 36%, respectively, primarily on the back of the tech stock rally. Zoom Video Communications, Inc. (ZM) and Amazon.com, Inc. (AMZN) are two stocks that benefited the most from the pandemic. While the trend to work and learn remotely has helped ZM gain 593.2% year-to-date, increased online purchases have helped AMZN soar 72.9%.
While the technology sector has been one of the major beneficiaries of the pandemic-led changes, all tech stocks are not good picks. Intel Corporation (INTC), Stamps.com Inc. (STMP), and Overstock.com, Inc. (OSTK) are three such stocks that witnessed a price decline recently and may face trouble in the future because of their fundamentals. While INTC’s stock slid 21% since its second-quarter earnings on July 23rd, STMP’s and OSTK’s stock fell around 40% since August after rising 272% and 1,630% between January and mid-August.
Intel Corporation (INTC)
Technology giant INTC was founded in 1968 and has a market cap of $194.45 billion. It was the largest chip manufacturer in the world and dominated the semiconductor industry with its x86 chips. However, all is not well with the company. INTC is losing its share in the semiconductor market to competitors like Taiwan Semiconductor Manufacturing Company Ltd. (TSM), Advanced Micro Devices, Inc. (AMD), NVIDIA Corporation (NVDA), and QUALCOMM Incorporated (QCOM). According to Mercury Research, INTC’s CPU market share has gone down to 79.8% in the third quarter of 2020 from 84.2% in the third quarter of 2019.
As INTC struggles to launch its 7-nanometer (nm) node online, its revenue decreased 4% year-over-year to $18.3 billion in the third quarter. It was the highest revenue decline that the company witnessed in over five years. INTC’s data center revenue slid 7% to $5.9 billion, and net income fell 29% to $4.3 billion.
INTC expects its revenue to total $17.4 billion in the fourth quarter, down nearly 5% sequentially. For full-year 2020, the company has provided revenue guidance of $75.3 billion, which is up 4.6% year-over-year. But Wall Street analysts expect INTC’s revenue to decline by 5.8% in 2021.
INTC is rated “Neutral” in our POWR Ratings. It holds “C” for Buy & Hold Grade, “D” for Trade Grade and Peer Grade, and “B” for Industry Rank. It is also ranked #63 out of 86 stocks in the Semiconductor & Wireless Chip industry.
Stamps.com Inc. (STMP)
Established in 1996, STMP provides online shipping and mailing services. It offers Parcel Select, Media Mail, Priority Mail Express, Priority Mail, First Class Mail, and other mailing services. STMP is a one-stop postage service provider. It allows customers to print shipping labels and postage stamps; integrate orders from e-commerce platforms; and get discounts on mail services.
On November 5th, STMP reported its results for the third quarter. Its revenue rose 42% year-over-year to $193.9 million following increased adoption of e-commerce platforms due to the COVID-19 pandemic. Profit surged 243% to $3.83 per share. Despite such strong results, the company’s stock price declined 11.5% on November 6th and continued to fall on the COVID-19 vaccine announcement.
Once the COVID-19 vaccine is launched and…
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