Intel pops as Wall Street sees light at end of PC tunnel (INTC)

Jul 27, 2023

Justin Sullivan

Intel (NASDAQ:INTC) shares rose more than 6.5% in pre-market trading on Friday after the semiconductor giant reported strong second-quarter results and guidance, leading to praise from Wall Street analysts.

KeyBanc Capital Markets analyst John Vinh, who has a sector-weight rating on Intel (INTC) shares, said the company's Client Computing Group benefited from strong demand for Chromebooks and high-end notebooks, while also taking market share.

In addition, third-quarter shipments are now tracking consumption data as inventories are finally "healthy," leaving Vinh "encouraged" by the results.

AMD (AMD), Intel's biggest competitor in the PC space, rose nearly 2% in pre-market trading on back of the results.

Santa Clara, California-based Intel (INTC) earned an adjusted 13 cents per share on $12.9B in revenue during the period ending July 1, as the company's Client Computing Group generated $6.78B in revenue, above estimates.

Revenue attributed to its Data Center and AI group fell 15% year-over-year to $4B, while Network and Edge revenue dropped 38% to $1.4B. Intel's nascent foundry unit saw a 307% surge in revenue to $232M.

A consensus of analysts expected the company to lose 3 cents per share on $12.14B in revenue.

Looking ahead, Intel (INTC) said it expects third-quarter revenue to be between $12.9B and $13.9B, with the mid-point above the $13.28B estimate. It also expects adjusted earnings of 20 cents per share, topping the 13-cent-per-share estimate.

TD Cowen analyst Matthew Ramsay also praised Intel's (INTC) Client Computing results, but pointed out that the "good enough" guidance could allow for the company to regain some momentum.

"Headwinds remain in [Data Center and AI group] as cloud share loss, soft enterprise/China and AI spending shifts continue, but a cleaned-up Client channel is encouraging," Ramsay, who also boosted his price target to $38 from $31, wrote in an investor note.

J.P. Morgan analyst Harlan Sur, who has an underweight rating on Intel (INTC) shares, said the business is now moving into a "gradual recovery phase," even as some parts are still weak, notably Networking and Edge.

"Overall, we continue to be pleased by the team’s execution, but want to see them execute high volume production / shipments of its Meteor Lake (PC client) and Emerald Rapids (server) platforms in the [second-half] of this year," Sur, who raised his price target to $35 from $30, wrote.

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