Bernstein is warning investors that a turnaround for PC demand could take longer. The shares for the top two computer chip makers aren’t a buy—yet.
On Tuesday, analyst Stacy Rasgon reiterated his Market-Perform ratings for both
Intel
(ticker: INTC) stock and
Advanced Micro Devices
(AMD) shares. He also reiterated his $30 stock price target for Intel and $80 stock forecast for AMD.
In early Tuesday trading, Intel stock fell 0.7% to $29.59, while AMD shares rose 4.1% to $101.37.
Intel and AMD use the x86 chip architecture in making processors that act as the main computing brains for PCs and servers.
“The PC market remains in correction following 2 years of pandemic-fueled demand pull- forward,” Ragson wrote. It “probably has another quarter or two to go.”
Demand for computers has been deteriorating in recent quarters. Last month, the research firm IDC said worldwide shipments of PCs fell 29% in the March quarter from a year earlier. That follows a 28% drop from a year earlier in the December quarter and a 15% decline in the September quarter.
The analyst said 2023 expectations for Intel seem conservative, while AMD estimates might be a “bit more aggressive” if server demand continues to weaken. Overall, Ragson said he believes PC demand could stabilize by the third or fourth quarter this year.
“We note that most PC forecasts have the industry returning to pre-COVID levels this year, a trajectory the industry appears to be on at the moment,” he wrote.
Earlier this month, AMD reported earnings for the March quarter above expectations, but gave a disappointing forecast for the current quarter. In April, Intel posted first-quarter earnings and guidance above expectations, but reported a large year-over-year revenue decline pf 36% for the March quarter.
Write to Tae Kim at tae.kim@barrons.com
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