Intel Corp.’s Bear Camp Shrinks as BofA Securities Analyst Updates Stock Outlook

by Warren Seah

A BofA Securities analyst, Vivek Arya, has revised his negative call on Intel Corp.’s stock, resulting in a smaller bear camp for the company. While there are ongoing concerns about limited upside in the PC market and Intel’s loss of server market share to Advanced Micro Devices Inc. (AMD) and ARM Holdings PLC (ARM), Arya is more optimistic about other aspects of the business. This includes Intel’s Mobileye autonomous-driving unit and its foundry plans.

Positive Developments for Intel

Arya believes that Intel is undervalued when considering its various parts as a whole. This perspective may change once the company separates its design and manufacturing financials early next year. The separation will allow for a more accurate comparison of each business unit with its respective competitors. In addition, Intel has expressed interest in spinning off its field-programmable gate-array business into a separate public company. This move could potentially increase the stock’s value when evaluated on a sum-of-the-parts basis.

As a result, Arya has upgraded Intel’s stock rating to neutral from underperform in his recent note. He has also raised his price objective from $32 to $50.

Revised Outlook for AMD

In a surprising shift, Arya has also updated his outlook on AMD. He now rates the stock as a buy, up from neutral, and has increased the price objective to $165 from $135. Arya sees AMD as well-positioned to gain a larger share of the highly profitable $100 billion-plus accelerator market. He believes that AMD will continue making progress in the server central processing units (CPUs) segment against its main competitor, Intel.

Nvidia Remains a Strong Player

While Arya acknowledges that Nvidia Corp.’s stock is his preferred choice for investing in compute and artificial-intelligence trends, he emphasizes that AI and generative AI present long-term opportunities for many companies.

Market Update

Towards the end of Friday’s trading session, AMD shares were up 0.6%, while Intel’s stock had gained 1.9%.

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