Shares of Intel (NASDAQ:INTC) jumped on Thursday after a formerly bearish analyst upgraded the stock. Bernstein raised its rating from "underperform" to "market perform," attaching a $50 price target. Intel stock was up about 5.1% at 11 a.m. EDT.
Bernstein sees Intel as able to weather the storm created by the novel coronavirus pandemic. Bernstein analyst Stacy Rasgon believes Intel's strong balance sheet and cheap valuation will allow the stock to hold up better than its semiconductor peers.
While Rasgon is no longer pessimistic on the stock, she still sees issues with the company. Manufacturing problems, market share losses, and margin pressure aren't going away, even as attention has shifted to the impact of the pandemic.
In the short term, Intel could benefit from increased sales of laptops as more employees work from home. However, a recession will almost certainly knock down demand for a wide range of consumer electronic devices.
In the data center, demand appears to be holding up. Memory chip manufacturer Micron reported strong demand from enterprise and cloud customers in its fiscal second-quarter report on Wednesday, an indication that data center spending hasn't yet been impacted by the pandemic. That could change, but for now, it's good news for Intel.
Intel's biggest problem might be competition. Advanced Micro Devices has staged an incredible comeback over the past few years, and it now offers CPUs for PCs and servers that go toe to toe with Intel's products.
For the PC, AMD's Ryzen processors have made inroads in the desktop market and are slowly picking up market share in the laptop market. For servers, AMD's EPYC processors are winning market share as well. Intel has already been forced to indirectly cut prices via new product lines on some of its expensive server chips.
Intel should have no problem surviving the crisis brought on by the novel coronavirus pandemic. But the company will likely continue to lose market share to AMD, assuming AMD isn't completely derailed by the crisis.