What the bad jobs report means for markets
On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Intel Corporation (NASDAQ:INTC), reducing the price target from $21.00 to $20.00 while sustaining a Neutral rating on the shares. This aligns with the broader analyst consensus, as tracked by InvestingPro, which shows analyst targets ranging from $19 to $31, reflecting mixed sentiment on the stock that currently trades at $20.01. The firm’s analysts pointed out that Intel reported satisfactory results for the December quarter but provided a weaker guidance for the March quarter, with expectations of approximately $12.2 billion in revenue, below the consensus estimate of $12.8 billion. According to InvestingPro data, Intel’s financial health metrics raise concerns, with the company currently unprofitable and showing negative returns on assets of -8.59%. Get access to 8 more crucial InvestingPro Tips about Intel’s financial position and future outlook.
The analysts highlighted several factors impacting Intel’s forecast, including an approximately 15% quarter-over-quarter decrease in the March quarter guidance, with declines in both the Client Computing Group (CCG) and the Data Center and AI (DCAI) segments. Additionally, concerns were raised about Intel’s AI roadmap lagging behind competitors, with the Jaguar Shores project delayed until 2027, contrasting with rivals AMD (NASDAQ:AMD) and NVIDIA (NASDAQ:NVDA)’s AI revenue projections of roughly $10-12 billion and $182 billion, respectively.
Gross margins for the December quarter were reported at 42.1%, but are expected to drop by 620 basis points quarter-over-quarter to 36% in the March quarter. The analysts also noted that the margin pressure in 2025 is anticipated due to increased reliance on external foundries.
The report further detailed challenges in the data center domain, with a soft roadmap for the Granite Rapids processors and uncertainty surrounding the launch of the Clearwater Forest platform, which is expected in the first half of 2026.
Mizuho’s assessment acknowledged that while the CHIPS Act and SCIP initiatives offer some positive aspects for Intel, these are counterbalanced by higher capital expenditure as the company begins to increase production with its Panther Lake processors and as it seeks new leadership. The firm concluded by reiterating its neutral stance on Intel stock, citing ongoing challenges in the PC and server markets.
In other recent news, Intel Corporation has seen significant adjustments in its stock price targets by various analyst firms. Stifel, Baird, and Roth/MKM analysts have all downgraded their price targets from $25 to $20, maintaining a neutral rating. This adjustment follows Intel’s Q1 2025 guidance, which was set significantly below the typical seasonal trends. Rosenblatt Securities, on the other hand, reaffirmed a sell rating on Intel’s stock with a target price of $20, citing weak PC demand, limited data center sales, and ongoing market share losses.
In recent developments, Intel has announced its collaboration with United Microelectronics Corporation on a pilot production line in Arizona and the construction of its new manufacturing complex, known as the Silicon Heartland, in Ohio. The company also intends to spin off its venture capital arm, Intel Capital, into an independent fund.
Intel’s earnings for the fourth fiscal quarter of 2024 are expected to align with current expectations, with revenue pegged at $13.8 billion and Non-GAAP EPS of $0.12. However, the first fiscal quarter of 2025 has a slightly negative forecast, with revenue forecasts at $13.0 billion and Non-GAAP EPS of $0.17.
Global Equities Research has encouraged clients to take advantage of the current weakness in Intel’s stock, citing strong prospects for the company’s AI initiatives. Meanwhile, the former CEO of Intel, Pat Gelsinger, purchased NVIDIA stock during its recent dip, praising the potential of AI technology.
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