Stellar results from Intel Corp could signal brighter tech earnings results in coming weeks, but analysts warn stocks themselves may be stuck in a short-term correction.

Intel shares fell more than 3 percent even after analysts from Credit Suisse, Raymond James and JMP Securities, among others, raised their price targets on the stock. JMP Securities and Thinkequity raised their ratings to outperform and buy respectively.

The broader market was down on Friday as losses from JP Morgan Chase & Co helped drag the tech-heavy Nasdaq Composite down 1.24 percent.

Wedbush Morgan analyst Patrick Wang expected a short-term correction for Intel and many other semiconductor stocks as Wall Street locks in profits after a solid fourth-quarter showing from the world's largest chipmaker.

Buy on the rumor, sell on the news, he said, adding that semiconductor stocks have had a good run when put in the perspective of downgrades from both Morgan Stanley and Merrill Lynch before Intel reported stellar earnings.

There's no rhyme or reason behind the weakness here except that expectations are up and people are taking profits, Wang said.

The Philadelphia Semiconductor Index rallied almost more than 15 percent over the holiday quarter and the intervening days before Intel's earnings announcement; the Nasdaq Composite rallied almost 12 percent.

But, despite indicators of strong demand and low inventories heading into the Chinese New Year, semiconductor stocks fell uniformly across the board, with the Philadelphia Semiconductor Index down 3.44 percent to 344.67. The shares of Intel arch-foe Advanced Micro Devices Inc closed down 1.78 percent at $8.84, graphics chipmaker Nvidia Corp was down 2.95 percent to $17.11 and Xilinx Inc was down 2.45 percent to $23.52.


Longer term, Intel's better-than-expected outlook and results helped cement hopes of a strong tech sector recovery, as corporations join consumers in opening their coffers in a rebounding economy.

Intel set the tone, said Robert W. Baird & Co. analyst Tristan Gerra.

He expected to see most semiconductor stocks beat fourth quarter earnings expectations, with guidance for the first quarter that will push consensus numbers to rise. But I don't think it's going to be nearly with the same type of magnitude that Intel reported last night.

In a post-earnings note to investors, FBR Capital Markets' Craig Berger expected Intel's earnings to foreshadow good news for its rivals and peers.

We upgraded shares of AMD from Market Perform to Outperform, he wrote, adding that Intel's blowout revenue and profit results gave him more confidence that Advanced Micro Devices was also benefiting from a robust PC market.

(Reporting by Ian Sherr; editing by Andre Grenon)