Intel Corporation (INTC.US) guides "pouring cold water" Analysts focus on supply and gross margin pressures 18A as key variables.

Intel Corporation (INTC.US) latest financial report and guidance disappointed the market, causing the stock price to plummet. As of the market close on Friday, Intel Corporation's stock price dropped nearly 16%. The company's disclosed guidance for the quarter was weaker than expected, and ongoing supply constraints continued to drag down gross margin performance, putting pressure on investor sentiment. Several analysts pointed out that the first-quarter guidance was "unimpressive." Analysts from APAC Investment News stated that after a rapid increase in Intel Corporation's stock price in the previous months, the valuation has become high; although technical execution remains a key factor for the company's long-term trajectory, the short-term environment may be more "tolerant," but the road ahead will still be bumpy due to the ongoing chip shortage. Citigroup stated in an investor report that Intel Corporation needs to improve yields at all process nodes, making it difficult for gross margins to return to above 40% in the short term; however, server CPU pricing is expected to increase. Citigroup maintained a "neutral" rating and slightly lowered the target price from $50 to $48. Wedbush also pointed out that prior to the financial report, Intel Corporation's stock price was once trading at a high valuation of nearly 50 times the consensus expected EPS for 2027. Despite the positive signals from 18A/Panther Lake, the substantial improvement in long-term EPS and profit margin trajectory remains difficult to quantify. Wedbush reiterated a "neutral" rating and a target price of $30, believing that the current valuation is difficult to be fully supported by fundamentals. Regarding manufacturing progress, RBC Capital Markets stated that they are currently awaiting customer announcements from Intel Corporation regarding the 14A process. Management emphasized that there has been active engagement for 14A, and customers may make decisions in the second half of 2026, with potential customer announcements likely to appear in the second half of the year, but substantial revenue contributions may need to wait until the end of 2028. RBC maintained a "sector perform" rating and lowered the target price from $50 to $48. Despite the challenges, Intel Corporation anticipates that server CPU supply constraints will improve in the second half of this year. HSBC pointed out that the company's first-quarter gross margin of 34.5% was below their expectations and the market consensus, mainly affected by product structure and the ramp-up of 18A; however, management explained that the weakness mainly stemmed from capacity shortages caused by stronger-than-expected demand for server CPUs, and the related constraints will gradually ease from the end of the first quarter of 2026 and throughout the year. HSBC maintained a "hold" rating and a target price of $50. UBS Group AG believes that despite the expected supply improvement, Intel Corporation's structural disadvantages relative to AMD (AMD.US) continue to expand, potentially causing them to miss out on the upward momentum in the server market and AI related spaces; this could be more favorable for AMD. UBS Group AG maintained a "neutral" rating and slightly raised the target price to $52. Morgan Stanley also emphasized the competitive pressure Intel Corporation faces in the server market, noting that AMD has absorbed all unit growth in recent times. The bank believes that Intel Corporation's supply will improve, but in the competition for 5nm or even 7nm server products, AMD still holds an advantage, maintaining a "sector perform" rating and raising the target price to $41. A relatively optimistic view comes from KeyBanc. The bank believes that Intel Corporation has the opportunity to secure Apple Inc. (AAPL.US) as an 18A customer, and win significant clients for 14A. KeyBanc reiterated a "overweight" rating and raised the target price from $60 to $65.