Wells Fargo Securities said Intel stock is likely to slow down after gaining nearly 20 percent earlier this year on the back of a recovery in the semiconductor market. Wells Fargo analyst Aaron Reikers downgraded his rating on Intel stock from 'Outperform' to 'Market Perform', citing overvaluation of the company's stock and growing competition from Advanced Micro Devices (AMD). βWe believe that Intel stock is now in line with a more balanced risk to reward,β he wrote on Friday. "Investor sentiment has become more subdued on the back of positive dynamics and growth in AMD shares." After the analyst's findings were announced on Friday, Intel shares fell 1,5% to $55,10.
Late last year, AMD unveiled its next-generation 7nm server chip called Rome, which will be released in mid-2019. At the same time, the first Intel chips based on 10nm technology will not ship until the 2019 holiday season (i.e. November-December). Considering that finer manufacturing processes have always allowed semiconductor companies to create faster and more energy-efficient chips, one can understand analysts' wariness about Intel's current lag behind its competitor in this area.
Reikers predicts that AMD's chip market share in the server market will grow to 20% or more in the long term from 5% last year. βWe think it will be very comfortable for AMD's 7nm Rome to compete against Intel's upcoming 14nm Cascade Lake-AP as well as 10nm Ice Lake,β he wrote. According to FactSet, AMD's current rating for Reikers is "Outperform," higher than Intel's after the downgrade.
Given the overall market strength, Reikers raised his target price for Intel stock to $60 from $55, which would see the company's shares rise by 9%.
Source: 3dnews.ru