Intel shares fell by 2% on Tuesday after BMO Capital slashed its ratings on the chipmaker, stating that the company’s earnings are unlikely to recover in the coming years. BMO analyst Ambrish Srivastava switched his view on Intel from outperform to market perform while also lowering the stock target from $62 to $52. His reasoning was that CEO Pat Gelsinger’s plans were seemingly going down the drain, and all of what has been said till now appears to be hogwash (albeit in a nicer way).
Srivastava explained that Intel is having difficulty improving production and tackling AMD which reported a stellar third quarter for the nth consecutive time. His previous positive rating on Intel was “predicated on our thesis that under the new CEO, the company had an opportunity to finally turn the ship around from years of miscues on the process technology and manufacturing front.”
Srivastava further expressed his confusion over Intel’s plans to expand into additional manufacturing and the contract foundry business even though it’s “struggling with the underlying assumptions”. This cut from BMI was one of several last Friday, a reaction to Intel’s disappointing Q3 earnings and Q4 forecast.