14 DAY TRIAL // In an unexpected turn of events, analysts have decided to downgrade the rating placed on Intel stock and instead increase the rating of AMD's stock, as they believe the Santa Clara chip giant will have a hard time reaching its usual third quarter sales target.
Intel's rating was changed from “outperform” to “market perform,” which equals to a rating of “hold,” by Craig Berger of FBR Capital Markets.
The same analyst also modified AMD's stock rating from “market perform” to “outperform,” which is equivalent with “buy.” At this point in time, Berger believes that a 20 percent share price upside should be more easily achieved with AMD than with Intel.
“We are not negative on Intel near $22, we just want to limit exposure to PC chip stocks, while recognizing the potential for more earnings growth with AMD in 2H11,” Berger wrote.
Intel’s shares “have herculean difficulties breaking out above $24,” added Berger for the EETimes publication.
On the other hand, AMD's recently introduced A-Series accelerated processing units based on the Llano architecture are going to drive the company's sales upwards as OEMs like Hewlett-Packard, Acer and Dell are interested in using the APUs inside their products.
In fact, HP has already announced an extensive series of notebooks (11 models in total) that will feature AMD's Llano processing units.
However, it is important to note that the positive stance the analyst has taken towards AMD is just tactical in nature and less of a long-term investment.
“While these AMD checks are incrementally positive, we note that Intel is accelerating its move to 22 nm and 14 nm, has major scale, manufacturing, and cost advantages versus AMD, and could effectively ‘squash’ AMD’s Fusion efforts at will with more aggressive pricing tactics,” Berger wrote.