TECH STOCKS: Intel, Google Lift Techs; GameStop Falls

By Benjamin Pimentel, MarketWatch

SAN FRANCISCO (MarketWatch) -- Intel Corp. shares were up sharply Tuesday, leading the tech sector higher, after J.P. Morgan lifted its rating on the chip giant based on signs of a stabilizing PC market and more realistic expectations from Chief Executive Brian Krzanich.

Intel (INTC) was up 4% to close at $26.51, setting the pace for a chip sector rally. J.P. Morgan analyst upgraded the stock to overweight from neutral.

"We believe the PC market will remain relatively stable in 2014, and we believe Intel's new CEO will continue to provide realistic guidance and focus on areas where Intel has an advantage -- thereby improving margins and returns," J.P. Morgan analyst Christopher Danely told clients in a note.

Other chip stocks posted gains, with Advanced Micro Devices (AMD) , up 4.1% to close at $4.30 and Texas Instruments (TXN) gaining 2.6% to close at $43.34.

The Philadelphia Semiconductor Index (SOX) was up 2.3%. The Nasdaq Composite Index(RIXF) was ahead 1.7% to close at 4,183, turning positive for the year.

The group also got a lift from Google Inc.(GOOG), which was up 2.4% to close at $1,149 a day after the Internet powerhouse announced that it was acquiring Nest Labs Inc. for $3.2 billion.

While the news surprised some analysts, the acquisition also won praise on Wall Street.

"With this acquisition, Google is placing a bet that it can connect the more than 115 million homes in the U.S. and eventually millions more globally. Google is also making a bet on the Internet of Things space with a strong brand with good intellectual capital, and a management team that is good at industrial design," Topeka Capital's Victor Anthony told clients in a note.

Other gains came from Facebook Inc. (FB) and Hewlett-Packard(HPQ). Apple Inc. (AAPL) climbed 2% to close at $546.39, while Twitter Inc. (TWTR) rose 0.7% to close at $58.21.

Shares of AOL Inc. (AOL) jumped nearly 7% to close at $47.85.

On the downside, shares of GameStop (GME) fell 20% to close at $36.31 after the video game retailer lowered its forecast. GameStop said it now expects a quarterly profit of $1.85 to $1.95 a share, down from an earlier forecast of $1.97 to $2.14 a share.

The stock has shed more than 25% since the beginning of the year.

Other technology stories from MarketWatch:

Google raises some privacy issues with Nest buy

In Silicon Valley, $3 billion now price for start-ups

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