Despite the positivity and share price surge following the announcement on Thursday that Nvidia will invest in Intel, analysts at Citi have downgraded INTC to Sell from Neutral in a note on Friday, upping their price target for the stock to $29 from $24 per share.
Intel and Nvidia announced a deal that will see Intel build CPUs that Nvidia will integrate into its AI platforms and CPUs that integrate Nvidia graphics for the PC market. In addition, Nvidia will invest $5 billion in Intel stock.
However, Citi analyst Christopher Danely said the firm expects “minimal improvement for Intel as better graphics won’t make Intel’s CPU better than AMD’s, given the processor is the main performance driver.”
Furthermore, the bank doesn’t believe the CPU for Nvidia AI platforms is meaningful, “as this seems aimed at Nvidia’s Grace CPU product, and we believe the market opportunity is roughly $1-$2 billion for Intel or 3% of C26E sales.”
Meanwhile, the Citi analyst noted that investors believe a foundry deal is next, but he doesn’t believe that is the case.
“INTC stock is up roughly 50% since early August on the Nvidia deal and speculation that a foundry deal is next,” said the bank. “We disagree given our belief that Intel’s foundry is years behind TSMC.”
“We downgrade Intel from Neutral to Sell given our belief the stock is pricing in success in its leading-edge foundry business, which we believe has minimal chance to succeed,” concluded Citi.
Source :
https://www.investing.com/news/stock-market-news/citi-sees-little-upside-for-intel-downgrades-stock-after-nvidia-partnership-4246527
