Citi isn’t buying the hype around Intel after it announced its partnership with Nvidia , telling clients the former is likely to continue struggling. The bank downgraded Intel to sell from neutral. Although it raised its price target to $29 from $24, that figure still signals 5.1% downside. “We downgrade Intel … given our belief the stock is pricing in success in its leading-edge foundry business, which we believe has minimal chance to succeed,” Citi analyst Christopher Danely said in the note. Intel said Thursday that Nvidia would invest $5 billion in the company, sending the stock up more than 22%. That marked Intel’s best daily performance since Oct. 29, 1987, when it soared 26.4%. INTC 5D mountain INTC 5-day chart Under the agreement, Intel will integrate Nvidia’s graphics into its central processing unit, in addition to building CPUs for its partner’s artificial intelligence platforms. However, Intel’s plan to integrate Nvidia’s technology into its CPUs is unlikely to give it an edge over rival Advanced Micro Devices, which already offers processors with strong multicore performance at lower prices, Citi said. “We doubt this makes Intel CPUs more competitive as integrating another company’s graphics wouldn’t make a CPU more competitive given the processor is the main performance driver for a PC,” Danely wrote. The bank also noted that Intel and Nvidia’s AI collaboration is unlikely to generate big returns, given that the total addressable market for the offering is only valued at between $1 billion and $2 billion. Intel shares edged down 0.5% in premarket trading on Friday following the downgrade. Analysts are largely lukewarm on Intel. Thirty-nine of the 47 Wall Street shops that cover the stock have given it a hold rating, according to LSEG data.
