Why KeyBanc Is Betting On Intel's Comeback

Intel Corporation INTC, which has ceded market share to rivals including Advanced Micro Devices, Inc. AMD and NVIDIA Corporation NVDA, could rebound strongly, according to KeyBanc Capital Markets.

The Intel Analyst: Weston Twigg upgraded shares of Intel from Sector Weight to Overweight and assigned a price target of $82. (See his track record here )

The Intel Thesis:  Intel may have finally worked through testing times, when it ceded its manufacturing technology lead, Twigg said in a Monday upgrade note. (See his track record here.)

The company is focused on maximizing its opportunities beyond PC, delivering a broad set of solutions for the evolving drivers of compute such as edge computing, datacenter computing, AI/ML autonomous things and 5G-enabled computing, the analyst said. 

The following three steps are driving Intel's comeback, he said:

• Plunging deep and hard into AI, be it datacenter, 5G, IoT, edge/endpoint devices, inference, autonomous things. 
• Diversify manufacturing by embracing the chiplet, leveraging packaging, multiply products on multiple nodes. 
• Bundling it all together with software such as oneAPI.

"Intel is already focused on these steps, in our view, and if it executes well, it could stem share losses in core CPU markets and accelerate share gains in newer markets (IoT, GPU, edge), setting the Company up to outperform the broader semi industry over the next decade," Twigg said. 

The company's 10nm manufacturing has hit its stride, with products launching throughout the year, the analyst said. 

Notwithstanding fragmented competition, Intel has two distinct advantages over rivals, he said: in-house manufacturing, which creates a gross margin advantage and pricing lever, and high cash generation that can be used to fund R&D and acquire technology. 

INTC Price Action: At last check, Intel shares were up 1.39% at $60.16. 

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