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This week was an eventful one in the stock markets. Intel's sixth consecutive earnings beat lit a fuse under the entire semiconductor complex, confirming that the CPU is not a relic of the past but the indispensable foundation of the AI era.

Meanwhile, geopolitical crosscurrents in the Middle East kept energy markets and risk sentiment in a constant tug-of-war. The signal was clear: AI infrastructure spending is accelerating, and the market is repricing accordingly.

Daly Asset Management cuts through the noise with systematic, data-driven strategies and zero hidden fees. Independent thinking, not consensus chasing.

Stock of the Week

Ticker: INTC | Sector: Technology | Market Cap: $335B | Yield: N/A

Intel just delivered one of the most decisive earnings beats in recent semiconductor history. Q1 revenue came in at $13.58 billion against a $12.42 billion consensus, with non-GAAP EPS of $0.29 versus the 1 cent expected. The real story is the margin recovery: non-GAAP gross margin hit 41%, and AI-driven revenue surged 40% year-over-year, anchored by a 22% jump in Data Center and AI.

The pivot from GPU-heavy training to CPU-dependent inference is real, and Intel's Xeon Granite Rapids lineup is capturing that demand with pricing power to match. The 18A node is ahead of internal yield projections, and the Terafab partnership with the Musk ecosystem validates the 14A roadmap.

Risks:

The valuation math is slightly uncomfortable. At a forward non-GAAP P/E of 117.78x and EV/EBITDA of 27.63x, Intel is priced well above any of its semiconductor peers. Free cash flow remains negative due to foundry investment, and a probabilistically weighted scenario analysis puts the implied price target at $37.13, representing more than 50% downside from current after-hours levels.

Verdict:

The valuation is stretched, but you don't buy Intel here for what it earns today. You buy it because the CPU is reclaiming the AI stack, ASPs are rising, and the 18A node is the first credible challenge to TSMC's process leadership in a decade. The re-rating is justified.

Market Snapshot

The most notable divergence this week is the sharp spike in WTI Crude Oil (+6.55%) against a backdrop of broad equity declines and falling Gold prices. This unusual decouple suggests that geopolitical risk and supply chain fears in the Middle East are overpowering typical risk-off asset flows, leaving equities vulnerable to stagflationary pressures.

Market Commentary

DOJ Drops Powell Probe, Clearing Path for Warsh

The Justice Department closed its criminal investigation into Jerome Powell and the Fed's $2.5 billion headquarters renovation, redirecting the matter to the Fed's Inspector General. The IG had already reviewed the project twice and found no wrongdoing.

The real story: the move unblocks Kevin Warsh's confirmation, which Sen. Thom Tillis had stalled citing the "bogus" probe. Whether Warsh represents genuine reform or just a change in personnel at the controls of the same machine remains the more consequential question for rate markets in 2025 and beyond.

April PMI: Stockpiling Masks Structural Weakness

S&P Global's flash U.S. Composite PMI rose to 52.0 in April from a near-recessionary 50.3 in March, but the headline flatters. Manufacturing's surge to a 47-month high of 54.0 was driven largely by panic-buying ahead of supply disruptions, not organic demand. Services barely held expansion territory at 51.3.

More alarming: the output price index hit 59.9, its highest since July 2022. Chris Williamson of S&P Global noted the data is "consistent with annualized growth struggling to exceed 1%." The Fed's rate-cut window is narrowing fast.

Middle East Ceasefire Extended, Hormuz Tensions Persist

Trump announced a three-week extension to the Israel-Lebanon ceasefire following White House meetings with both countries' ambassadors. Simultaneously, Iran's IRGC navy continued laying mines in the Strait of Hormuz, and Trump ordered the U.S. Navy to shoot on sight any vessel doing so. WTI held near $95, Brent near $105.

The University of Michigan's Consumer Sentiment Index was revised up to 49.8 for April, but remains well below March's 53.3 reading. Consumers are not convinced the geopolitical situation is under control, and the data backs them up.

European Rotation: Tech Gains, Miners Bleed

European equities closed the week in the red, with the Stoxx 600 down 0.6%, though the internal rotation told a sharper story. Technology led gains, rising 1.7%, while mining stocks shed nearly 1.8% as the Iran conflict continued disrupting commodity supply chains.

Standouts included SAP, up 5.3% on a 17% rise in operating profit and 19% cloud revenue growth, and Novo Nordisk, up 6.3% after Wegovy prescription data showed 18,000 second-week scripts versus rival Lilly's Foundayo at just 3,700. Renault fell 2.8% on a 3.3% sales decline. Quality earnings are separating winners from the noise.

Tactical Map

• Semiconductor equipment over software as a service: A heavy iShares Expanded Tech-Software ETF plunge led by ServiceNow's margin guidance cut contrasts with Intel and Texas Instruments soaring on hardware-centric AI agent buildouts.

• Tactical put spreads over outright shorting: With institutional money pushing S&P 500 put options to double the implied volatility of calls, buying puts outright has become prohibitively expensive for hedging the ongoing Middle East geopolitical risk.

• Building products over consumer retail: Massive consolidations like QXO Inc.'s $17 billion deal to acquire TopBuild are highlighting highly resilient, cash-generating industrials while big-box retailers like Best Buy face margin downgrades.

Theme to Watch

Brussels is overhauling its defense industrial policy, pushing back against NATO's US-led procurement preferences — a generational shift toward strategic autonomy now backed by a 20% surge in European defense spending in 2025 alone. This isn't cyclical; it's doctrine hardening into industrial policy, with equipment deliveries expected to accelerate through 2026–27.

Alpha play: European defense primes — Rheinmetall, Saab, Thales, Leonardo — sit directly in the contracting flow that a "Buy European" mandate redirects away from US competitors.

Forward View

1. Consumer Confidence (Conference Board): Tuesday, April 28

2. FOMC Rate Decision & Powell Press Conference: Tuesday, April 29

3. Q1 GDP Advance Estimate + Core PCE + Employment Cost Index: Thursday, April 30

4. Nonfarm Payrolls (April): Friday, May 1

Thursday the 30th is the week's fulcrum — GDP, PCE, and ECI all land simultaneously the morning after Powell speaks. Any gap between his tone and the data creates a whipsaw risk; trim unhedged duration going into Wednesday's close.

Final Words

The CPU is reclaiming the AI stack, crude is pricing in geopolitical fracture, and Thursday's data trifecta will stress-test every consensus trade in the market.

At Daly Asset Management, we navigate the noise with systematic discipline, data-driven conviction, and zero hidden fees.

Disclosures: This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own due diligence or consult with a financial advisor before making investment decisions.