Intel (NASDAQ:INTC) stock was off to a rough start this morning, falling 5% in response to a downgrade from Northland Capital before recovering a bit in the afternoon. As of 12:30 p.m. EDT, shares are still off by 4%.
Echoing comments from other analysts and even from Intel itself, Northland Capital predicted that Intel stock -- which has performed pretty well this year, up 26% since 2018 began -- will suffer from a lack of "catalysts" post-Q2.
As the analyst explained in its "underperform" rating, Intel has relied heavily on sales to server farms to power its revenue growth of late, but Intel's advantage in chip quality "is diminished if not evaporated," and there's a real risk that rival AMD will begin taking market share from the chip giant in the second half of this year, putting the brakes on Intel's growth rate.
In the long term, Northland sees positive catalysts at Intel's business strengthen in such fields as autonomous cars (Mobileye), artificial intelligence, and graphics processing chips. Unfortunately, Northland doesn't believe any of these factors will "move the needle" for Intel before 2020 at the earliest.
In the meantime, Intel needs to do two things in its upcoming fiscal Q2 2018 earnings report due out late next month. First, meet or beat consensus analyst targets for $0.85 per share -- no easy task, as it will require an earnings growth rate of 18%. And second, reassure investors that the rest of this year won't be as bad for Intel as Northland seems to think it will be.
With more than a month to go before earnings arrive, expect further volatility as investors and analysts continue placing their bets on what Intel will tell us.