Intel MIC Won’t Help This Time Since Intel Stock Is Dropping. And Ndivia Is Not Its Rival This Time
Sep 21, 2023
Intel was undoubtedly expecting a better outcome from its annual technology conference featuring cutting-edge technologies like Intel MIC rather than a share dip. Analysts remain sceptical of the chip maker’s ability to compete with Nvidia in artificial intelligence while still defending its core market and expanding its semiconductor manufacturing business.
Intel (INTC) kicked off its Innovation event this week with a series of announcements about AI chip advancements. Wall Street analysts were pleased with the technology but less so with remarks dampening expectations for increased gross margins.
According to Oppenheimer analyst Rick Schafer, Intel’s 2024 gross margin is expected to be in the low-to-mid 40 per cent range, compared to the company’s long-term aim of 60%. Oppenheimer rates Intel shares as Perform with no price target.
Oppenheimer analyst Rick Schafer noted that while he and his colleagues respect Intel’s efforts to reclaim process leadership and build a foundry business, he believes the firm is still in a “prove-it” phase while multi-year recovery initiatives play out. We’re still on the bench here.
On Wednesday, Intel stock was down 3% at $35.25 after closing down 4.3% the day before.
Wedbush analyst Matt Bryson linked the price dip to statements made by Intel officials about gross margins. He stated that the cautious view appeared warranted as the firm balances a number of new items. Bryson rates Intel stock as Neutral, with a target price of $35.
Intel has several hurdles. It is competing with Nvidia (NVDA) in the data centre industry, wants to grow chip production to compete with Taiwan Semiconductor production (TSM), and must maintain its core central-processing unit business.
UBS analyst Timothy Arcuri said he and his colleagues remain optimistic about progress on the manufacturing roadmap, but there are still too many issues surrounding Intel’s data centre position.
While Intel has promised a pipeline of more than $1 billion in prospective orders for its AI data-centre gear, not including technologies like Intel MIC, the analyst believes investors will have to wait until 2025 to materialise into substantial income. That’s the year Intel plans to release its Falcon Shores processor, a major next-generation graphics-processing unit designed to enable high-performance computing and artificial intelligence.
Arcuri maintained a Neutral rating and a $38 target price on Intel stock.
Intel officials reassured at least one bull, as Raymond James’ Srini Pajjuri stated that the slower gross-margin increase appears to be due to cyclical causes and that the business would meet its long-term aim.
Pajjuri stated that he and his colleagues are keeping their estimates intact for now and reiterating our Outperform rating since he and his colleagues believe structural positives such as improved execution, reduced share losses, foundry advancement, and LT long-term AI opportunities should overcome temporary margin challenges.