By Paige Tanner, Market Realist
Canaccord Genuity analyst Matthew Ramsay is disappointed with Intel’s guidance and diversification strategy. He said the operating margin for Intel’s data center is likely to fall since revenue growth depends largely on adjacencies, which generate lower margins than CPUs (central processing units).
Bernstein analyst Stacy Rasgon has lowered Intel’s rating. He believes the company doesn’t have a large enough growth segment that can replace its PC (personal computer) sales in a similar volume. It’s on the verge of losing its process lead, ending its competitive advantage. New growth opportunities in IoT (Internet of Things), AI (artificial intelligence), networking, and memory come with huge investments and low profits.
Moreover, the company’s data center segment is cracking as competition increases. Rasgon added that AMD, with its new CPUs and GPUs, and Nvidia, with its lead in AI, offer better growth opportunities in the data center space than Intel. All these factors have made Intel a less attractive stock. Analysts believe the stock may not see significant growth in fiscal 2017.