On Friday, New Street Research adjusted its stance on shares of Intel Corporation (NASDAQ:INTC), moving the chipmaker's rating from Buy to Neutral. The firm set a price target for Intel at $27.00, reflecting concerns over the company's performance and market competition.
The downgrade comes as Intel faces continued loss of market share in both the PC and server segments. New Street Research highlighted that, despite new product shipments such as Meteor Lake, Sierra Forest, and Granite Rapids, Intel's competitors, particularly AMD, are making significant gains. AMD's market share in PCs is projected to rise above 20% and is expected to exceed 40% in servers by the fourth quarter.
The analyst from New Street Research pointed out that the trend of improvement Intel showed in the PC market is no longer apparent, and with the relative scale of servers, Intel's position may weaken further. The firm's price target is based on a 13 times multiple of the projected $2.1 earnings per share in 2026.
The report also noted that inventory movements could be a factor in the market share changes but emphasized that the lack of evidence of a turnaround in Intel's manufacturing and server capabilities is a major concern. The firm concluded that the risk-reward balance for owning Intel stock has tilted towards the unattractive side, prompting the downgrade.
In other recent news, Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA) experienced a drop in their market capitalization due to disappointing quarterly earnings. Microsoft's market cap decreased by approximately 6% to $3.1 trillion, and Tesla's profit margins shrunk to their lowest point in over five years. Despite these weaker results, Tesla's market cap increased by 17.2% to $740.1 billion, driven by positive outlooks on its future growth from Morgan Stanley (NYSE:MS).
On the other hand, Advanced Micro Devices (NASDAQ:AMD) reported robust Q2 results with a 9% year-over-year increase in revenue, reaching $5.8 billion. The company's data center segment was the standout performer, with revenue surging by 115% to a record $2.8 billion. Additionally, AMD received a reiterated Buy rating from Benchmark following its bullish Q2 earnings report and future guidance.
These are some of the recent developments in the technology sector. It's worth noting that despite the current market fluctuations, companies like AMD are continuing to invest in AI technology, indicating a positive outlook for the future of this sector.
InvestingPro Insights
In light of New Street Research's downgrade of Intel and the competition it faces from AMD, it's pertinent to consider real-time data and insights from InvestingPro for a comprehensive market perspective. AMD's financial health and market performance provide context to the competitive landscape described in the article.
InvestingPro Data indicates that AMD has a substantial market capitalization of $214.51 billion and is trading at a high earnings multiple, with a P/E ratio of 165.86. Despite recent downward revisions by analysts, AMD's revenue growth over the last twelve months stands at 6.4%, and the company has maintained a gross profit margin of 51.42%. These figures underscore AMD's financial resilience and its ability to generate profit from its revenues.
InvestingPro Tips highlight that AMD is expected to see net income growth this year, reinforcing its position as a prominent player in the semiconductors industry. Additionally, while the stock has experienced a decline over the last month, AMD's liquid assets exceed its short-term obligations, suggesting a stable financial footing for immediate operational needs.
For readers looking to delve deeper into AMD's financials and market performance, InvestingPro offers additional tips. Currently, there are 24 more tips available on InvestingPro, which can be accessed for further detailed analysis, including insights on AMD's profitability, debt levels, and valuation multiples. To explore these insights, visit https://www.investing.com/pro/AMD.
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