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Intel’s sale of Altera stake “a step in the right direction,” says JPM analyst
The move “strengthens Intel’s balance sheet amid a more challenging macro environment,” wrote the bank’s semiconductor stock analysts.
JPMorgan analysts covering Intel see the deal it struck yesterday to sell 51% of Altera as positive — but not so positive as to prompt them to upgrade their “underweight” view (essentially a “sell” rating) on shares of the struggling US semiconductor icon.
For their part, investors weren’t moving the stock much on Tuesday, after it ramped up 2.9% on Monday in the wake of the deal announcement.
In a note published Tuesday, JPM wrote:
“The transaction marks the first major strategic move under Intel’s new CEO, Lip-Bu Tan, and underpins the company’s broader turnaround strategy and refocus to its core x86 businesses...
Overall, we believe this is a step in the right direction, though we remain UW on the stock as Intel continues to navigate through a challenging period as it right-sizes the company while continuing to move forward with its technology/manufacturing product roadmaps.”
Intel’s x86 chip architecture was once the dominant semiconductor used in data center servers, though its lead was gradually eroded as AMD gained market share.
Now, as data center spending has shifted rapidly toward AI applications, sales of Nvidia’s GPUs have soared, leaving Intel in the dust.
