Intel Analysts Aren't Totally Impressed By Q3 Results: Nvidia May Be A Customer 'At Some Point'

Shares of Intel Corporation INTC continued to climb in early trading on Friday, after the company reported healthy third-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Bank of America Securities analyst Vivek Arya maintained an Underperform rating, while reducing the price target from $35 to $32.
• Morgan Stanley analyst Joseph Moore reiterated an Equal-Weight rating, while raising the price target from $35 to $39.
• Goldman Sachs analyst Toshiya Hari reaffirmed a Sell rating, while lifting the price target from $28 to $30.
• Needham analyst Quinn Bolton maintained a Buy rating and price target of $40.
• Oppenheimer analyst Rick Schafer reiterated a Perform rating on the stock.
• KeyBanc analyst John Vinh reaffirmed a Sector Weight rating on the stock.

Check out other analyst stock ratings.

BofA Securities: Intel delivered a solid performance in the third quarter and raised its fourth-quarter guidance, “largely driven by a normalizing PC market,” Arya said in a note.

“Looking into CY24E, we expect sales growth of 8-10% YoY on continued PC recovery, AI/inference adoption in servers, and foundry sales ramp,” he stated. The analyst added, however that “faster pace of new products could keep costs elevated and GM closer to mid-40s rather than bullish investor scenarios of 50%.”

Morgan Stanley: “18% q/q growth in PCs was the primary variance from our model, but the data center malaise persists into 3q and keeps our 2h #s basically unchanged,” Moore said. While Intel’s AI pipeline is strengthening, there are concerns over the “lack of profits."

“Management outlines increasing interest from foundry customers, though without naming names,” the analyst wrote. He added that Nvidia Corp NVDA could become a customer “at some point.”

Goldman Sachs: “Intel reported strong 3Q23 results, guided 4Q23 above Street expectations, and shared positive commentary on the ongoing transformation as well as customer traction in the foundry business,” Hari wrote in a note.
“While our near-term estimates were clearly too cautious and we acknowledge Intel’s strong execution, particularly on its technology roadmap (i.e. 5 nodes in 4 years), we continue to perceive Intel’s pursuit of an internal foundry model as a challenge,” he added.

Needham: “Intel delivered its third consecutive beat and raise quarter,” Bolton said. “The company displayed strong execution on all fronts including its product and process technology roadmap, IFS customer acquisition and overall financials,” he added.

As Intel achieves its goal of product and process node leadership, gross margins “should improve significantly,” the analyst further stated.
Oppenheimer: “CCG strength contributed to upside aided by seasonality,” Schafer said. DCAI declined by 5% sequentially and came in 4% below the consensus estimate, mainly due to “shifting spend from traditional to AI-accelerated server,” he added.

Management divested the silicon photonics pluggable transceiver business, marking the “10th business exit in 2.5 years,” the analyst wrote.

KeyBanc Capital Markets: Intel’s third-quarter results and fourth-quarter guidance “solidly” exceeded expectations, Vinh said. “Results benefited from improving PC demand as channel inventories are healthy, with strong demand in commercial and gaming,” he added.

Although the DCAI results were below expectations, they are expected to grow sequentially in the fourth quarter, “as servers continue to grow and Sapphire Rapids continues to ramp,” the analyst further stated.

INTC Price Action: Shares of Intel had risen by 9.67% to $35.66 at the time of publication Friday.