Nvidia's investment ignites Intel's stock price, but Citigroup goes against the trend with a bearish outlook: Foundry lagging behind TSMC for years, benefits have been overstretched
Citi downgraded Intel's rating from "Neutral" to "Sell," raising the target price from $24 to $29. Despite Intel's stock price rising 23% after Nvidia announced a $5 billion investment, Citi analysts believe Intel's performance improvement is limited, the market size is small, and the prospects for artificial intelligence products are poor. Analysts pointed out that Intel's foundry business lags behind TSMC, and investors may have already priced in the expectations of the stock price increase
According to Zhitong Finance APP, Citigroup has released a research report downgrading Intel (INTC.US) from "Neutral" to "Sell," but raising the target price from $24 to $29. Previously, Intel's stock price surged 23% to $30.57 on Thursday after Nvidia (NVDA.US) announced a $5 billion investment.
Citigroup analyst Christopher Danely stated, "We expect Intel's performance improvement to be limited, as more powerful graphics cards do not make Intel's CPUs superior to AMD's, since processors are the main factor determining performance. Additionally, considering the potential market size is relatively small (between $1 billion and $2 billion), we do not have high expectations for its artificial intelligence products. We also believe that the company's stock price has already reflected expectations of success in its leading foundry business, but we think the likelihood of success in this business is minimal."
Furthermore, given that Intel's stock price has risen about 50% since early August, Danely indicated that investors have likely already priced in expectations for Intel's wafer foundry deals. Danely added, "We believe Intel's wafer foundry business is several years behind TSMC."
It is reported that Nvidia announced earlier this week that it has agreed to invest $5 billion in competitor Intel, and the two companies will jointly develop chips for personal computers (PCs) and data centers, which will help Intel address its current operational challenges. Nvidia will acquire Intel common stock at a price of $23.28 per share
