In an incredible analyst call, one of the top firms on Wall Street sees chip giant and industry leader Intel Inc. (NASDAQ: INTC) getting absolutely hammered by new competition, and the analysts think that the shares could fall a stunning 17%.
In a new research note, Bernstein lowered its rating on Intel to Underperform from Market Perform and said that the venerable Silicon Valley company’s earnings will come in well below current expectations next year. A check on Yahoo Finance shows that a survey of analysts sees the company having an average revenue estimate in 2018 of $61.46 billion and earnings per share of $2.92.
Bernstein analyst Stacy Rasgon made the case to clients in a Tuesday note that the only reason to remain long Intel shares was the company’s data center business, as it is seen as slowing. Now, the analyst feels that the core chip business is under serious threats from two companies that have products that could pose serious challenges.
The analyst cites Advanced Micro Devices Inc. (NYSE: AMD), which is releasing the company’s first major offering in five years, the Ryzen chipset, and NVIDIA Corp. (NASDAQ: NVDA), which has exploded over the past year and is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.
NVIDIA, which was the top performing stock in the S&P 500 last year, has been moving into visual computing chips for cars, mobile devices and supercomputers. The Bernstein analyst also cited the company’s graphics processing unit offering as preferable in the high-growth artificial intelligence field.
Counting out Intel is a very bold call, and there is every reason to believe it will do anything necessary to hold is market share and ground. However, challengers that can undercut on a price basis and offer chip sets that are in demand in new applications could pose a serious threat to a company that helped to start the semiconductor revolution when it was founded in 1968.