Intel’s quarterly reports and accompanying statements from company management contained many positive signals for investors, and as trading began on Friday, there were those ready to hang on to every single one of them. As a result, Intel shares started the trading session with a price increase of more than 10%, and the accusation of optimism was even enough to strengthen the securities of rivals NVIDIA and AMD.
Although the NVIDIA share price only rose by one and a half percent, after the decline caused by the introduction of sanctions against China, this can be seen as a good performance. The price of AMD shares rose almost four percent, and this can be seen as evidence of investor confidence that the PC market has reached a tipping point where inventory surpluses have been minimized and supply and demand have moved closer to a state of equilibrium.
As a reminder, Intel’s third-quarter results exceeded expectations in terms of revenue, profit margins and earnings per share. In other words, investors didn’t even care that Intel’s revenue had declined for seven quarters in a row. For the current quarter, no less important, Intel expects revenue to return 8% year over year to $15.2 billion. The company officially ended the third quarter with a sales decline of the same 8% to $14.2 billion. In the desktop division, Intel’s sales fell by 15 percent to $2.75 billion in the client products segment it fell by 3% to $7.9 billion. In the third quarter, they increased core sales by almost two percent to $4.5 billion.
Although the Intel boss admitted that the capacity of the global PC market this year will not exceed 270 million units, he expressed confidence that it will return to 300 million units in the future, given the same refusal to support Windows 10 , coupled with the development of core processor features to accelerate artificial intelligence systems and the release of new generations of chips will begin to drive demand for new PCs in the coming quarters.
Analysts tracking Intel’s activities were divided in their conclusions after the quarterly report was released. Goldman Sachs representatives, while praising the company’s success in mastering five new technological processes in four years, do not at all take into account Intel’s desire to transfer the relationship between the company’s production departments and its own developers to a basis that is more remembering this, interaction with third-party customers is justified. Analysts are also concerned about Intel’s prospects in the server processor segment, where the company could continue to lose market share in monetary terms. These concerns are shared by Morgan Stanley officials. However, the latter see Intel’s success in adapting its products to the boom in artificial intelligence and the development of the same contract business as positive factors.
In the quarterly report, JP Morgan experts liked the $3 billion cost reduction that the company achieved at the end of the current year. However, they also added that the next 12 months will be the toughest test for Intel management as the company has to launch three new families of server processors and a consumer processor and these will be manufactured using three different technologies. If Intel can successfully execute its production program in the next 12 months, analysts say the next three to five years will be a successful period for Intel. JP Morgan representatives increased their forecast for the price of Intel shares from $35 to $37 per share, the current value is about $36.
Mizuho Securities officials expressed hope that the PC market will stabilize after Intel’s quarterly reports, saying that although it will decline by 10% this year, it could grow by 3% next year. Raymond James analysts were able to identify in Intel’s coverage the conditions for a further slowdown in the company’s market loss, improvement in financial performance (including profit margins), the development of contract business and the emergence of new opportunities related to the expansion of artificial intelligence systems. Raymond James experts put their forecast for Intel shares at $42 per share.
Analysts at Benchmark Research saw signs of market success for the new families of processors introduced by Intel, but did not deny that the company continues to cede its position in the huge niche of the server segment to AMD. The announcement of new generations of server processors, according to the authors of the forecast, will allow Intel to regain lost market positions, allowing the target value of the company’s stock price to be set at $ 42 per share.
There were even those who doubted the Intel boss’s words that Arm-compatible processors in the PC segment did not pose a threat to the company’s business. According to Truist Securities, Intel’s improved financial performance in the third quarter was largely driven by the PC segment, but the company will face stiffer competition in the future with the introduction of Qualcomm’s Arm-based processors and AI acceleration features. These analysts are not willing to give more than $38 per Intel share.