Wedbush expects Intel Corp (NASDAQ:INTC, XETRA:INL) to comfortably beat second-quarter expectations when it reports on Thursday, but has kept a 'neutral' rating and $60 price target, warning that the shares are more vulnerable to a shift in market sentiment than to the numbers themselves.
The target sits 37% below the current $95 share price, and is based on around 40 times the broker's 2027 earnings estimate of $1.53, a multiple Wedbush acknowledges is well above Intel's historic norm and its peers.
The broker believes revenues and margins are set to handily beat consensus, driven by server demand and pricing.
Wedbush expects data centre sales to rise around 10% quarter on quarter and 40% year on year, with double-digit increases in average selling prices during the quarter, following first-quarter rises and with a further round reportedly being implemented in the current period.
Personal computer chip pricing appears to be seeing roughly parallel increases, supporting a modest revenue uptick despite a backdrop of slowing PC builds and cost-related demand destruction.
On margins, Intel had guided for a decline in the second quarter due to a one-off benefit from selling salvaged chips and the ramp of its 18A process, but Wedbush expects margins well ahead of guidance as pricing lifts and yields improve faster than expected.
The broker cautioned, however, that strong numbers may not be enough.
It pointed to Taiwan Semiconductor Manufacturing, where even a significant beat and a reacceleration in sales failed to prevent a semiconductor sell-off, driven by concerns over Chinese gains in artificial intelligence, US-Iran tensions, inflation's impact on rates, and hyperscaler returns on data centre spending.
Wedbush argued Intel may be better placed to weather some of these worries, since China still needs compute for inference.
But with Intel's valuation well above historical norms and industry peers, the broker believes it is arguably more susceptible to broader market swings than the likes of Taiwan Semiconductor or Nvidia.
Wedbush expects numbers to move meaningfully higher, helped by potential operating cost reductions following another round of job cuts.
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