Intel Stock Drops. Why Analysts Are Skeptical It Can Take on Nvidia.

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Intel was probably hoping to get the best out of the stock’s slump at its annual tech conference. Analysts are still skeptical of the chipmaker’s ability to take off at once.

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Intel

(Ticket: INTC) held its innovation event this week with a series of announcements about advances in i-chips. Wall Street analysts were reasonably upbeat about the technology, but generally less so in comments that dampened expectations for an improvement in margins.

Oppenheimer analyst Rick Shaffer was projecting Intel’s 2024 gross margin to be in the low-to-mid 40% range, versus the company’s long-term target of 60%. Oppenheimer has an outperform rating on Intel stock, with no target price.

“We recognize Intel’s efforts to regain process leadership and develop its founding business, but we believe the company will remain in a proven mode as many years of improvement efforts take place. Here we are sidelined,” wrote Oppenheimer’s Rick Shaffer.

Intel stock fell 3% at $35.25 on Wednesday, after closing up 4.3% the previous day.

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Wedbush’s Matt Bryson attributed the price drop to Intel executives’ comments on gross margins. The conservative outlook seems appropriate as the company weighs a series of new products, he said. Bryson has a neutral rating on Intel stock with a target price of $35.

Intel has challenges on a few fronts. Faced with Nvidia’s ( NVDA ) AI growth in the data center market, it is looking to expand its chip manufacturing.

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(TSM), and must protect the main central processing unit business.

“We’re optimistic about progress around the manufacturing roadmap, but there are still a lot of issues around it. [Intel’s] UBS analyst Timothy Arcuri wrote.

While the analyst envisions a pipeline worth more than $1 billion for its own AI data center hardware, investors will have to wait until 2025 to see meaningful returns. This is the year when Intel is scheduled to launch its next-generation graphics processing unit for the Falcon Shores chip, which is expected to support high-performance computing and AI.

Arcuri set a neutral rating and a $38.00 target price on shares of Intel.

Intel executives confirmed at least one bull as Raymond James Srini Pajjuri’s slow gross margin expansion appears to be down to cyclical factors and supports the company’s long-term target.

“We leave our estimates for now and reiterate Outperform on factors such as improving performance, adjusting stock losses, and LT. [long-term] The possibility of AI should be weighed against temporary marginal headwinds, Pajjuri wrote.

Write to Adam Clark at [email protected]