Intel stock pops as Wall Street hopes 'worst case' scenario is over
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Intel (NASDAQ:INTC) shares rose more than 4% Friday as some few Wall Street analysts upgraded the semiconductor giant after it signaled the worst may be over.
Benchmark analyst Cody Acree upgraded Intel (INTC) to buy from hold, and set a price target of $39 a share on the chipmaker's stock, noting that the company's guidance for the next quarter includes continued working through of inventories in both the P.C. and server markets, as well as further loss in the data center, all of which reflect a "worst case scenario."
Acree said in an investor note he believes that Intel's (INTC) results and outlook "now reflect a worst-case scenario considering the current macro-economic climate and accordingly we believe it is prudent to begin to take a more positive stance on Intel's shares."
Intel competitors AMD (AMD) and Nvidia (NVDA) rose in pre-market trading following the company's results.
Led by Chief Executive Pat Gelsinger, Intel (INTC) expects second-quarter revenue to be between $11.5B and $12.5B, with analysts forecasting $11.75B in sales. Adjusted gross margins are expected to tick down to 37.5%, while the company forecast an adjusted loss of 4 cents per share and 62 cents on a GAAP basis.
Intel (INTC) lost an adjusted 4 cents a share on $11.72B in revenue in the first-quarter, topping Wall Street estimates of a 14-cent loss and $11.13B in revenue.
Gross margins fell 16.2 percentage points from the year-ago period to 34.2% on a non-adjusted basis and 38.4% on an adjusted basis.
Wedbush Securities analyst Matthew Bryson also raised his rating on Intel (INTC), moving to neutral from underperform, as he believes the company's quarterly results have marked a bottom in sales.
Bryson said he struggles "to see Intel sales downticking from [first-quarter and second-quarter] levels as markets [particularly enterprise] invariably rebound" at least modestly in the second-half of this year "with a more pronounced pickup into 2024." Bryson also boosted his price target on Intel's (INTC) stock to $30 a share from $20.
In addition, Bryson said improved market demand should also lead to higher gross margins and cash flows as loading improves and inventories come down.
Citi analyst Christopher Danely reiterated his neutral rating on Intel (INTC), noting that the company is continuing to lose market share to AMD (AMD), but the PC market looks to be stabilizing.
"While we expect the data center end market to rebound at some point, it continues to drag on Intelâs EPS," Danely wrote. "In addition, the company continues to chase growth in markets that we believe could be challenging to be successful in, such as foundry." 
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