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Intel and Dollar General have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 20, 2023 – Zacks Equity Research shares Intel INTC as the Bull of the Day and Dollar General DG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. NVDA, Intel Corp. INTC and Datadog, Inc. DDOG.

Here is a synopsis of all five stocks:

Bull of the Day:

Intel is one of the world's largest semiconductor companies and a primary supplier of microprocessors and chipsets. The company is gradually moving into data-centric businesses such as AI and autonomous driving.

The stock currently sports the highly-coveted Zacks Rank #1 (Strong Buy), with analysts bullishly revising their earnings expectations higher across the board.

In addition to favorable earnings estimate revisions, the company resides within the Zacks Semiconductor – General industry, currently ranked in the top 16% of all Zacks industries. Let's take a deeper look at the company.

Intel

Intel shares have enjoyed notably strong price action year-to-date, up 70% and widely outperforming the general market. Shares melted higher following its latest quarterly release, with investors pleased with the better-than-expected results.

Regarding headline figures, Intel exceeded the Zacks Consensus EPS Estimate by 95% and posted revenue nearly 5% ahead of expectations, reflecting the third consecutive quarter of exceeding consensus earnings and sales expectations.

The company's top line has begun to show consistent sequential growth following declines throughout 2022.

Many are optimistic about the company's future trajectory. Mizuho Securities recently upgraded Intel shares to a Buy from Neutral while also increasing its price target from $37 to $50 per share, implying an upside of roughly 14% from current levels. Excitement surrounding new AI chips has brightened Intel's outlook in a big way.

Insiders appear to be optimistic as well; CEO of Intel, Patrick Gelsinger, recently made a big splash, acquiring roughly 6800 shares at a total transaction value of $300k. Another director dove in after the CEO, acquiring a whopping total of 66k shares at a total transaction value of $2.5 million.

Concerning the valuation picture, INTC shares presently trade at a 3.4X forward price-to-sales ratio (F1), above the 2.9X five-year median but well beneath the Zacks Semiconductor – General industry average of 10.1X.

The company witnessed a notable growth slowdown amid the slump in PC shipments over the last several years, as illustrated below.

Earnings are forecasted to pull back 50% in its current year on 15% lower revenues before returning to growth next year, with FY24 consensus estimates presently suggesting 100% earnings growth on 14% higher sales.

Bottom Line

Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.

The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Intel would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).

Bear of the Day:

Dollar General, a current Zacks Rank #5 (Strong Sell), is a discount retailer in the United States offering a wide selection of merchandise, consumable items, seasonal items, home products, and apparel.

Analysts have taken a bearish stance on the company's earnings outlook, with expectations decreasing across all timeframes over the last several months.

What's going on with Dollar General? Let's take a closer look.

Dollar General

Dollar General shares have suffered in 2023, cut in half and widely underperforming relative to the general market. The company's latest two sets of quarterly results soured the opinions of investors, seeing notable selling pressure post-earnings.

Nonetheless, shares are up 17% since their October low, perhaps reflecting a turn-around in current sentiment among market participants. Still, waiting until positive earnings estimate revisions roll in will be worthwhile, which would fully support positive price action.

The reasoning behind DG's poor share performance is primarily centered around crunched profitability and weaker revenue growth trends relative to prior periods. In fact, Same-store sales decreased 0.1% year-over-year in its latest quarterly release, with a decline in customer traffic as the primary driving factor.

In addition, the company's gross profit margin declined from 32.3% to 31.1%, with operating profit also decreasing 25% from the year-ago period. The unfavorable results caused DG to trim its current year (FY23) outlook, now expecting net sales growth in a band of 1.3% - 3.3% compared to 3.5% - 5.0% previously.

Despite the current unfavorable outlook, the company's shareholder-friendly nature certainly shouldn't be overlooked. Dollar General has boosted its dividend payout five times over the last five years, translating to a 17% five-year annualized dividend growth rate.

Shares are currently yielding 2.0% annually.

Keep an eye out for the company's upcoming quarterly release on December 7th, as the Zacks Consensus EPS Estimate of $1.23 has been taken 46% lower since the end of August and reflects a decrease of 47% from the same period last year.

Bottom Line

Negative earnings estimate revisions from analysts and crunched profitability paint a challenging picture for the company's shares in the near term.

Dollar General is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

Additional content:

GenAI Boom-Led Chip Demand to Aid NVIDIA's Q3 Earnings

NVIDIA Corp. is slated to report third-quarter fiscal 2024 results on Nov 21.

NVIDIA's third-quarter fiscal 2024 performance is likely to reflect the continued strength of its Datacenter business. The Datacenter end-market business is likely to have mostly benefited from the growing demand for generative artificial intelligence (AI) and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.

The company's second-quarter fiscal 2024 performance reflected record revenues across its data center end market, which mainly benefited from growing investments in generative AI. In the last reported quarter, its revenues from the Datacenter business jumped 171% year over year and 141% sequentially.

We believe that the trend is likely to have continued in the to-be-reported quarter. Our third-quarter revenue estimate for the data center end market is pegged at $12.5 billion, implying year-over-year growth of 226% and a sequential increase of 21%.

GenAI Boom to Drive the Top Line

Though AI has been around for years, the meteoric rise of OpenAI's ChatGPT has captivated the world's attention on the power of generative AI to augment human capability, suggesting that the AI boom may just get started.

Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data. It is driven by a large language model, which means it uses a lot of data to understand and generate conversations.

The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $667.96 billion by 2030, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 47.5% from 2023 to 2030.

The adoption of ChatGPT among enterprises has already proven generative AI technology's usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.

However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.

NVIDIA's next-generation chips with high computing power can be the top choice for enterprises. During the first-quarter fiscal 2024 earnings conference call, the company's CEO, Jensen Huang, already stated that existing data centers are insufficiently equipped to handle growing AI workloads.

NVIDIA's GPUs are already being applied in AI models, which is expanding its footprint in untapped markets like automotive, healthcare and manufacturing. The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. NVIDIA expects its third-quarter fiscal 2024 revenues to reach $16 billion from $5.93 billion in the year-ago quarter, largely driven by surging AI investments across the data center end market.

Zacks Rank & Other Stocks to Consider

NVIDIA currently sports a Zacks Rank #1 (Strong Buy). Shares of NVDA have surged 239.5% year to date (YTD).

Some other top-ranked stocks from the broader technology sector are Intel Corp. and Datadog, Inc.. Intel sports a Zacks Rank #1, while Datadog carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Intel's fourth-quarter 2023 earnings has been revised by 9 cents northward to 42 cents per share in the past 30 days. For 2023, earnings estimates have increased by 28 cents to 89 cents in the past 30 days.

Intel's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing on one occasion, the average surprise being 136.3%. Shares of INTC have rallied 63.7% year to date.

The Zacks Consensus Estimate for Datadog's fourth-quarter 2023 earnings has been revised upward by 9 cents to 35 cents per share in the past 30 days. For 2023, earnings estimates have increased by 19 cents to $1.51 per share in the past 30 days.

DDOG's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of Datadog have soared 48.5% year to date.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

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Intel Corporation (INTC) : Free Stock Analysis Report

Dollar General Corporation (DG) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Datadog, Inc. (DDOG) : Free Stock Analysis Report

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