Analysts: Intel's Datacentric Innovation Day Reinforces Performance Leadership, But No Major Surprises

Intel Corporation INTC held its Datacentric Innovation Day in San Francisco Tuesday and unveiled its next-gen processors and platform technologies.

The sell-side viewed the event as reaffirming the chip giant's performance leadership in data center products.

The Analysts

• Oppenheimer analyst Rick Schafer maintained a Perform rating on Intel. 
• Morgan Stanley analyst Joseph Moore maintained an Overweight rating and $64 price target.
• Bank of America Merrill Lynch analyst Vivek Arya maintained a Buy rating and $62 price target.
• Raymond James analyst Chris Caso maintained an Underperform rating.

Oppenheimer Sees Better Opportunities Elsewhere In Sector 

Intel unveiled seven new product portfolios focused on moving, storing and processing data in data center and at the edge, with the spotlight on the second-gen Xeon Platinum 9200 processor based on Cascade Lake, Schafer said in a Wednesday note.

Intel sees a datacentric total addressable market of $300 billion, the analyst said. 

The 14nm Cascade Lake+Optane is likely to ward off a competitive threat from Advanced Micro Devices, Inc. AMD's 7nm Epyc2, which is due in the second half of 2019, Schafer said. 

Even with the opportunities that were touted, Oppenheimer said it sees better structural growth and/or capital allocation investment opportunities elsewhere within the semiconductor group.

See also: With Semiconductor Demand Uncertain, KeyBanc Presents Stock Ideas

Wells Fargo: No Big Surprises

Intel's product introductions brought no big suprises, Rakers said in a Tuesday note.

The following were among the new datacenter products the analyst highlighted:

• The second-gen Xeon SP CPUs with up to 56 cores compared to AMD's 7nm Rome EPYC with up to 64 cores. 
• New 10nm Agilex FPGAs with second-gen Hyperflex architecture supporting 40-percent higher performance versus Intel's Stratix 10 FPGAs.
• 3D Xpoint-based Optane DC persistent memory.
• Quad-level cell based SSDs.
• Xenon D-1600.
• New 800-series ethernet adapters.

Morgan Stanley: Newer Initiatives Provide Optionality

Most of Intel's product pipeline information was already known, but the surprise has been customer testimonials in new areas — specifically Cascade Lake inference, Optane storage class memory and cloudification at the edge for communications infrastructure and other workloads, Moore said in a Wednesday note. 

The analyst said he continues to like the stock but sees a tough environment. The CEO transition will likely provide an opportunity to substantially improve cash flows, he said. 

"While this presentation likely won't drive the stock in the near-term, we do see optionality from these newer initiatives." 

BofA: Intel The Top Candidate For Multiple Rerating

Intel's expanding pie, incumbency, and product breadth can help offset share losses to AMD, Arya said in a Tuesday note

The chipmaker is a "top candidate for multiple rerating over time," the analyst said. 

Intel did not issue an update on its server CPU roadmap, Arya said. The company previously stated a 2020 timeframe for the release of the 10nm Ice Lake server CPUs, he said. 

Arya expects Intel to release another 14nm chip Cooper Lake in late 2019 or early 2020.

Raymond James Has Unchanged Long-Term View 

Despite Intel's first complete "date-centric portfolio launch," there was nothing to dramatically shift Raymond James' view of the company's longer-term prospects, Caso said in a Tuesday note. 

The analyst sees the Optane launch as Intel's commitment to its memory business. Accelerate compute remains a key theme for Xeon, he said. 

"Net, with the vast majority of inferencing expected to be done at the edge, Intel believes standard Xeon CPUs will remain the primary workhorse for accelerated computing, and is investing in software-based solutions to optimize performance." 

The Price Action

Shares of Intel, which also announced the appointment of a new CFO, were last seen trading 1.78-percent higher at $55.33. 

Related Link: RBC Says AMD Is High Beta Name To Own For 2019: 'It's Profitable To Buy The Stock On Down Days'

Photo courtesy of Intel.