Analysts remain cautious but identify glimmers of hope in Intel earnings

Intel






reported stronger-than-expected results for the second quarter on Thursday evening, surpassing expectations both in terms of revenue and earnings. This positive outcome comes as a relief to analysts and investors who witnessed Intel’s struggles in the previous quarters, where inventory clearance and retooling for AI-focused, GPU-heavy corporate investments presented challenges.

Following the announcement, Intel’s shares saw a 5% increase on Friday morning.

While the results were largely welcomed by Wall Street analysts, they also highlighted significant obstacles lying ahead for the company.

“Good results,” noted Citi analyst Christopher Danely in a Friday report, “but structural issues remain.” Citi reconfirmed a neutral rating and set a price target of $34.

“We anticipated that spending on Nvidia GPUs would come at the expense of Intel and AMD CPUs, and Intel has acknowledged that the data center market will remain weak for some time. Furthermore, Intel is persistently seeking growth in markets where our expectations for success are low, such as foundry and graphics,” Danely wrote.

Deutsche Bank, referring to Intel’s performance as “more than marginal,” maintained a Hold rating while raising the price target from $32 to $38, citing alleviated inventory challenges. However, the company is likely to face continued pressures as corporate spending continues to shift towards AI, according to Deutsche Bank analyst Ross Seymore.

JPMorgan, on the other hand, maintained an underweight rating on the stock (equivalent to a sell). Analysts raised Intel’s price target from $30 to $35 and praised the company’s “better-than-expected results.” However, JPMorgan pointed out that while continued execution improvement is a positive sign, the next challenge lies in improving the production and shipments of server- and client-side products.

During a call with analysts, Intel CEO Pat Gelsinger acknowledged the persistent weakness across all segments of the business throughout the year and expressed that sales of server chips are not expected to recover until the fourth quarter. He also stated that cloud companies are increasingly prioritizing the use of graphics processors for AI rather than relying on Intel’s central processors.

— CNBC’s Kif Leswing and Michael Bloom contributed to this report.