Intel (NASDAQ:INTC) was in focus on Friday after Citi downgraded the chipmaker following its deal with Nvidia (NASDAQ:NVDA).
Shares fell 0.7% in premarket trading.
“We expect minimal improvement for Intel as better graphics won’t make Intel’s CPU better than AMD’s given the processor is the main performance driver,” Citi analyst Christopher Danely wrote in a note to clients. “In addition, we don’t expect much from the AI product given the small [total addressable market] ($1 to $2 billion) and our belief that the stock is pricing in success in its leading-edging foundry business, which we believe has minimal chance to succeed.”
Danely lowered his rating on Intel to Sell from Neutral, but upped his price target to $29 from $24.
Additionally, with Intel shares up roughly 50% since early August, Danely said investors are likely pricing in a deal for Intel’s foundry. “We disagree given our belief that Intel’s foundry is years behind [Taiwan Semiconductor] (TSM),” Danely added.
