Bernstein warns about Intel shares 💡

In short:

• Bernstein recommends avoiding Intel (INTC.US) shares despite maintaining a "Market Perform" rating and a target price of $21, due to the dilution of shares by approximately 11% caused by the issuance of 520 million new shares sold mainly to the US government.

• The US government is becoming the largest shareholder, which may bring short-term stability, but at the same time limits the company's strategic flexibility.

• Intel faces serious structural challenges, including technological delays and loss of market share to competitors, which is sustaining investment uncertainty in the longer term.

Opis:

Bernstein recommends avoiding Intel (INTC.US) shares despite confirming its "Market Perform" rating and maintaining its target price at $21. Analyst Stacy Rasgon points out that the issuance of approximately 520 million new shares, including a large block sold to the US government, has significantly diluted shareholders by about 11%, which is unfavorable for current investors. The US government is becoming Intel's largest shareholder, which, while it may stabilize the situation, may also limit the company's flexibility in making strategic decisions.

Although government support may help in the short term, Bernstein highlights the serious structural challenges Intel faces. The company is lagging behind competitors such as TSMC, AMD, and Nvidia in terms of technology, and is also losing market share in the processor market. Intel has signaled the possibility of limiting chip production development to the 18A processor, which raises questions about its future innovation capabilities. Analysts emphasize that political involvement and government capital do not solve fundamental problems and may even create additional uncertainty in relations with customers and partners. Financial results, the consequences of the share issue, and technological challenges mean that the investment outlook for Intel remains uncertain. Bernstein advises investors to be cautious and avoid buying shares, despite potential short-term opportunities. Intel must prove that it has a viable strategy to rebuild its leadership position in the chip industry before it becomes an attractive choice for long-term investors.

Intel shares are still up 1.2% today.

Source: xStation