While AI is driving a boom in the chip sector, Intel seems
to be an exception, analysts said. Semiconductor makers that make chips for the
heavy data needs for generative AI were among the biggest winners in the stock
market in 2023.
The forecast from Intel, one of the largest suppliers of PC
chips, weighed on the rest of the sector. The Philadelphia SE Semiconductor
Index slipped 2.7 per cent to its worst day in more than three weeks.
“AI seems like (it is) everywhere except at Intel,” said
Hans Mosesmann, analyst at Rosenblatt Securities, which has a sell rating on
the stock.
The lack of any perceivable AI growth vector that moves any
dial “points to another, yes another, transitional year,” he added.
Shares of other chipmakers Nvidia, Advanced Micro Devices,
Qualcomm and Micron Technology fell between 1.3 per cent and 2.8 per cent.
Intel was set to shed about US$26 billion in market value,
if losses hold, based on its share price of US$43.47 in morning trade. Its
shares soared 90 per cent in 2023.
The chipmaker forecast current-quarter revenue that could
fall short of market estimates by more than US$2 billion.
“There’s a danger Intel is being left behind as chips from
the likes of Nvidia and Advanced Micro Devices play an increasingly important
role in the data-hungry AI industry,” said Russ Mould, investment director at
AJ Bell.
While Intel isn’t yet competitive in the AI-specific chip
market, its central processing units (CPUs) are often used in conjunction with
Nvidia’s AI chips, with a third of Intel’s server CPUs now sold as part of AI
systems.
Some analysts had positive comments on the stock, with at
least 15 brokerages raising price targets. The median price among brokerages is
US$44, per LSEG data.
“The company still stands to win from its AI bet in the long
run. Margins appear solid, meaning that CEO Pat Gelsinger’s plan will still be
put in motion, albeit at a slower pace,” said Thomas Monteiro, senior analyst
at Investing.com.
Intel’s stock trades at about 28 times its 12-month forward
earnings estimates, versus 45.08 for AMD and nearly 30 for Nvidia, according to
LSEG data. REUTERS
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