Intel Stock Downgraded by HSBC on 'Overdone' Rally
HSBC moves Intel to 'Reduce', citing valuation concerns after an 80% surge in the chipmaker's stock price this year.
Intel's remarkable stock run in 2023 faced a significant headwind this week as HSBC downgraded the chipmaker's shares from "Hold" to "Reduce." The bank cited concerns that the company's recent valuation surge is "overdone," despite a flurry of strategic investments and positive news that have fueled an almost 80% rally in Intel's stock this year.
HSBC analyst Frank Lee raised the price target on Intel (INTC) to $24 from $21.25, but the overall sentiment was cautious. The downgrade comes after a period of intense investor optimism, driven by a series of high-profile investments, including a and a 10% equity stake from the U.S. government as part of the CHIPS Act. Intel has also been making headlines with its artificial intelligence (AI) ambitions, with plans to ship over 100 million AI-capable PCs by the end of 2025.
Despite these positive developments, HSBC expressed skepticism about the sustainability of the rally. The bank noted that the recent investments were made at a discount to the market price and emphasized that a true turnaround for Intel depends on its own manufacturing execution. "Own fab execution remains key to any sustainable turnaround," HSBC stated, highlighting the challenges facing Intel's foundry business.
The bank also expressed doubts about the likelihood of a technology partnership with Taiwan Semiconductor Manufacturing Company (TSMC), a deal HSBC considers crucial for Intel's long-term recovery. raises questions about Intel's ability to compete in the high-performance computing and AI sectors.
Not all analysts share HSBC's bearish view. Deutsche Bank recently raised its price target for Intel to $30 from $23, maintaining a "Hold" rating. The bank pointed to Intel's "aggressive pursuit" of strengthening its balance sheet and its investments in product development and Foundry Services. The broader analyst consensus for Intel is currently a "Hold," though the average price target suggests potential downside risk from its current levels, as the . As investors weigh these conflicting views, the focus will remain on Intel's ability to deliver on its ambitious manufacturing and AI promises.