RBC Initiates Intel (INTC) at Sector Perform, Awaits Proof on Margins and Foundry Execution

Intel Corporation (NASDAQ:INTC) is one of the AI Stocks Making Waves on Wall Street. On January 14, RBC Capital analyst Srini Pajjuri initiated coverage of the stock with a “Sector Perform” rating and a price target of $50. Firm analysts see strategic progress for Intel, but are awaiting proof of execution on gross margins and foundry progress before adopting a more constructive stance.

The analysts praised Intel’s management for doing a commendable job right-sizing the business. The company has also strengthened its balance sheet and entered into a strategic agreement with AI chipmaker Nvidia.

The analysts further noted how PC/Server demand looks healthy for the company, and that its product competitiveness is also improving. Despite these positives, they have also cautioned about higher memory prices and supply constraints.

The analysts cautioned that these prices and constraints could impact Intel’s near-term revenue and margin performance. They also noted how the company lacks a compelling Data Center Artificial Intelligence narrative.

Gross margin upside and foundry progress are critical to sustained outperformance for Intel, and analysts are awaiting progress in these areas.

"We believe gross margin upside and Foundry progress are key for continued outperformance. Both are dependent on manufacturing yields where our visibility is limited. We initiate at Sector Perform as we await evidence of meaningful progress in these areas."

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

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