BofA update shows where active managers are putting money
Investing.com -- Intel (NASDAQ:INTC) shares could be poised for a short-term rally as earnings season approaches, according to Citi, which flagged a potential upside surprise that may trigger a squeeze. The stock remains heavily shorted, but the bank believes improving fundamentals could flip sentiment.
“Intel remains the most popular short but we believe the stock could squeeze higher during earnings given potential upside to EPS,” analyst Christopher Danely said in a Friday note.
Citi cited lower capital expenditure (capex) and operating expenses (opex), along with likely upside from the PC end market—responsible for 60% of Intel’s sales—as key drivers. The bank’s estimates for Q2 are above consensus.
Beyond Intel, Citi offered mixed views across the chip sector ahead of Q2 results. It expects AMD (NASDAQ:AMD) to trade higher before its earnings, boosted by investor enthusiasm for AI-related growth.
While the Wall Street firm acknowledged that buyside expectations may be too high, it lifted its price target on AMD from $145 to $165 based on sentiment improvements.
Micron (NASDAQ:MU), on the other hand, may struggle in the near term. Citi warned that the stock could remain weak due to “DRAM price flattening and fears of HBM oversupply.”
Microchip Technology (NASDAQ:MCHP) remains Citi’s top pick heading into earnings, with Danely noting the stock is under-owned.
“We believe MCHP has the most upside potential to consensus estimates in our coverage,” he wrote, with Citi’s 2026 EPS forecast standing 38% above consensus.
Meanwhile, ON Semiconductor (NASDAQ:ON) could face headwinds despite rising investor interest. Danely flagged ongoing risks in the company’s SiC and China low-end businesses, forecasting flat gross margins for the third quarter.
“We believe the stock could trade lower after earnings due to elevated expectations,” the note said.
Citi also remains cautious on Qualcomm (NASDAQ:QCOM), citing secular headwinds and the loss of Apple (NASDAQ:AAPL) as a customer, despite the stock being “surprisingly” widely owned.
Texas Instruments (NASDAQ:TXN) was seen as well-positioned, with enough upside to sustain its momentum, especially on gross margins. Citi’s EPS estimate for TXN is about 10% above consensus for the third quarter.