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StockBeat - Intel Climbs, but Citi Warns of Risks Ahead

Investing.com

Investing.com – Intel (NASDAQ:INTC) shares were rising strongly Wednesday, along with chip stocks generally, but a report from Citigroup has warned that the chipmaker faces a bumpy road in the second half of the end of the year, with rival Advanced Micro Devices (NASDAQ:AMD) hot on its tail.

Citigroup (NYSE:C) raised concerns about the downside to consensus estimates and the risk to Intel's second-half guidance given the potential for a slowdown in PC shipments as tariff-driven pull-ins fade.

Intel (NASDAQ:INTC) climbed more than 1.5% in tandem with the lift in the broader sector, with the Philadelphia Semiconductor Index up 1.1%.

Notebook units increased 5% month-over-month in August, which was below Intel's expectations by roughly 6%, according to a report by Citigroup (NYSE:C) Christopher Danely. The sales shortfall was blamed on the weaker shipments in the second quarter following a tough comparative from a year earlier, when vendors ramped up orders ahead of US-imposed tariffs on China.

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As well as the inventory correction for microprocessors, competition from Advanced Micro Devices (NASDAQ:AMD) is also expected to muddy the outlook on fourth-quarter growth for Intel (NASDAQ:INTC), according to Citi.

The update comes as expectations have dimmed that Intel (NASDAQ:INTC) CPU shortages would normalize sooner rather than later, with a Taiwanese ODM last month reportedly saying the shortage could remain around until the beginning of 2020.

The shortage of chips has proved a drag on the market over the last several months, impacting small and midsize vendors that struggled to secure CPUs. That, however, opened up the door for rival AMD to scoop up new business at the lower end of market.

Citi maintained its neutral rating and $53 price target on shares of Intel (NASDAQ:INTC), which are up nearly 11% for the year so far. The investing.com consensus target is $52.67.

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