Even as the broader market is set to carry on the momentum from Thursday, shares of chip giant Intel Corp. INTC are getting hammered in premarket trading on Friday.
What Happened: Intel traded down 2.02% at $29.16, according to Benzinga Pro data, while rival Advanced Micro Devices Inc. AMD and Nvidia Corp. NVDA rose 1.23% and 0.98%, each.
JPMorgan analyst Harlan Sur resumed coverage of Intel at Underweight and a $32 price target following a period of restrictions. The stock was previously rated an Outperform with a $64 price target.
Intel Pressured By Competition, Execution: As the broader semiconductor group recovers over the next 12 to 18 months, Intel will see a relatively slower pace of recovery due to competitive pressures, execution and macro headwinds, the analyst said.
"After several years of server CPU share loss to AMD and continued product execution missteps, we believe it will be several years before Intel is able to reverse the tide to reclaim technology leadership in hopes of regaining market share," the analyst said.
He noted that AMD under Dr. Lisa Su took about four years after she assumed reins to gain meaningful PC/server CPU market share and for the stock to reflect the fundamental improvement. On a similar count, Intel may take until 2024/2025 to see a meaningful turnaround, given Pat Gelsinger took over in March 2021, Sur added.
The technology gap that Intel is trying to bridge relative to AMD/Taiwan Semiconductor Manufacturing Company Ltd. TSM is formidable and will require flawless execution, said Sur.
On the contrary, Intel has had missteps recently in the form of delay of the Intel 7-based Sapphire Rapids originally slated for the first half of 2022 and falling short of its volume targets for its Alchemist discrete GPU due to software performance issues, he noted.
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