Intel (NASDAQ: INTC) stock tumbled after its latest earnings report as the chipmaker once again took a step back with its turnaround plan.
While the company beat estimates on the top and bottom lines, revenue growth was modest at just 9% as the company faced easy comparisons with the quarter a year ago.
Even worse, investors were disappointed by Intel's outlook as it expects flat revenue growth in the second quarter and a decline in earnings that was well below the Wall Street consensus.
Analysts largely responded to the report by lowering their price targets on the stock, but one reiterated a sell rating and a price target of just $17, implying downside of nearly 50% on the stock.
That was Rosenblatt Securities' Hans Mosesmann.
Image source: Intel.
Intel could have further to fall
While most Wall Street analysts tried to find the silver lining in Intel's latest update, Mosesmann didn't mince words.
Following the first-quarter report, he reiterated his sell rating on the stock with a $17 price target, saying the chipmaker is facing structural challenges in the CPU market as budgets are likely to shift to GPUs in the AI era and that Intel needs to deliver real results in AI rather than just talk.
Is Intel a sell?
Intel's disappointing guidance comes just weeks after the stock fell when it revealed a $7 billion loss in its foundry division last year.
Management continues to talk up its opportunities in the foundry business and in AI, but the numbers say otherwise. Despite the supposed opportunities in AI and foundry, the downside risk here seems to outweigh the upside potential. Intel still has too much to prove for it to be investable.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
