© REUTERS Intel (INTC) stock price recovery 'may be over', says Needham, downgrades rating
Analysts at Needham & Company downgraded shares of Intel Corporation (NASDAQ:) from a “buy” rating to a “hold” rating, citing several concerns that could impact the company's performance.
Analysts said yesterday's “unexpected EPS reset” and gross profit headwinds helped make the 12-month risk-reward scenario less convincing.
The Data Center and AI Group's business faces challenges from accelerating computing architectures and increasing competition in the CPU market, particularly from AMD (NASDAQ:) and ARM (ARM).
Management's optimistic PC TAM estimates are considered “aggressive,” and a potential AI PC upgrade cycle may take some time to materialize.
Additionally, there are concerns that gross profit growth will be lower than expected due to increases in depreciation and start-up costs.
Valuations are also considered less attractive compared to high-growth companies focused on AI. Furthermore, it is expected that it will take several years for contributions from Intel Foundry Services (IFS) to have a significant impact on the overall financial model.
Given these concerns about current challenges and future growth potential, Needham has chosen to rate Intel's stock a Hold.
“After a series of successes, the easy part of the turnaround appears to be over,” analysts said in a note.
“We believe that rising valuations, lower revenue/EPS estimates, increased competition (in core and non-core markets), and the remoteness of IFS's earnings are all contributing to a difficult path ahead. is watching.”
Analysts at Summit Insights also downgraded the company's rating.
Intel stock fell 9.3% in premarket Friday.
