Intel (INTC) Cut to Reduce by HSBC; Analyst Cites Overdone Rally and Execution Risks

Intel Corporation (NASDAQ:INTC) is one of the Trending AI Stocks on Wall Street. On October 8, HSBC analyst Frank Lee downgraded the stock from “Hold” to “Reduce” and raised its price target to $24.00 (from $21.25).

The firm believes that Intel’s rally since August is largely due to short-term investment deals, rather than an improvement in its long-term performance.

The company’s turnaround is dependent on fixing its foundry operations. However, it continues to face execution failures.

“A TSMC technology deal – which we think is the only one that matters – is unlikely despite potential for future investments,” analysts at HSBC noted.

The company has recently announced three major deals that drove a significant stock re-rating”

“1. SoftBank investing USD 2 billion;

1. The U.S. administration investing USD 11.1 billion for a 9.9% equity stake; and
2. NVIDIA investing USD 5 billion for an approximately 4% stake.”

“Although these deals were executed at a discount to market price, Intel’s stock has risen 55% since the first announcement in August. We expect additional deal announcements that could drive further short-term re-rating. However, we maintain that Intel’s own fabrication (fab) execution remains the key to achieving a sustainable turnaround.

Given this, we believe the recent re-rating is overdone and are downgrading Intel to Reduce from Hold.”

Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells computer products and technologies, delivering data storage, computer, networking, and communications platforms.

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