Bernstein Sees Potential Upside for Intel (INTC) and AMD (AMD) in 2Q

Bernstein analyst Stacy Rasgon reiterated Market Perform ratings on Intel (NASDAQ: INTC) and AMD (NASDAQ: AMD) ahead of widely expected weak quarters. INTC reports Q120 results on Thursday, April 23rd AMC while AMD reports Q120 results on Tuesday, April 28th AMC. Earnings risk is confirmed by Gartner and IDC estimating that PC shipments were down LDD YoY and ~25% QoQ, well below seasonal. Taiwanese ODM notebook shipments also fell 30% this quarter and -10% YoY. On the surface, these numbers offer substantial reason to be concerned.

However the analyst is more bullish stating "weakness is likely a measure of supply rather than demand in the wake of COVID-19, with WFH likely driving sell-out considerably higher, and taking channel inventories to low levels. Hence it seems possible we may see some Q2 strength as channel inventories get replenished, but bringing the 2H into question". Commentary on the two companies directly included "we believe INTC's trajectory may hold up better relative to others, with potentially stronger PC and hyperscale demand in the wake of COVID-19" and "AMD remains narrative-driven; (hopefully) that narrative can remain alive, COVID or not. On the positive, new products continue to gain traction, share gains (though slow) remain consistent, and the balance sheet is in stellar shape".

For an analyst ratings summary and ratings history on Intel click here. For more ratings news on Intel click here.

Shares of Intel closed at $59.75 yesterday.

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