BofA sees ‘no reason to buy' Intel stock after Q4 earnings: find out more

Core Viewpoint - Investors are selling Intel shares after the company reported strong Q4 earnings but provided disappointing guidance, primarily due to demand outpacing supply [1]. Group 1: Earnings and Guidance - Intel's Q4 earnings exceeded market expectations, but the guidance was soft, indicating a mismatch between demand and supply [1]. - The company's management acknowledged that they do not have enough products to meet customer demand [1]. Group 2: Analyst Recommendations - Bank of America analyst Vivek Arya advises investors to sell Intel shares, citing valuation concerns despite the stock being up over 15% year-to-date [2][3]. - Arya's bearish stance is not linked to Intel's outlook but rather to its high valuation compared to competitors like Nvidia [3][4]. - Arya highlighted that Intel's stock is trading at 90 times price earnings, while Nvidia trades at about 25 times [4]. Group 3: Competitive Position and Future Outlook - Arya expressed concerns about Intel's ability to compete with Taiwan Semiconductor in manufacturing and with Nvidia or AMD in design in the near term [4]. - Intel's commitment to establishing chip manufacturing in the US is seen as positive, but it will take another two to three years to realize [6]. - The stock has appreciated ahead of what Intel can realistically deliver by 2026, suggesting a potential sell-off at current levels [6]. Group 4: Price Targets and Market Sentiment - Arya reiterated an "underperform" rating on Intel with a price target of $40, indicating a potential downside of 13% from current levels [7]. - Intel shares are currently above their 20-day moving average, and a drop below $44 could lead to increased downward momentum [7]. - Other Wall Street firms share a similar cautious view, with a consensus rating of "hold" and a mean target of about $41, suggesting over 10% downside potential [9].