Intel’s stock nabs an upgrade: ‘Things are moving enough in the right direction.’

“In April 2021, we called for the top of the semiconductor cycle, driven by the combination of sky-high valuation multiples and record lead times, which often compel ‘bad behavior,’ including inventory accumulation, safety stock building, and double ordering,” he wrote. “Today, however, we are calling for the bottom in this cycle. Well … at least for Consumer, PC and Handset-related names, as we believe the acute portion of the contraction has passed, inventory levels normalize, and early demand shoots appear.”

On Intel
INTC,
+6.23%
specifically, he noted that the company has made improvements around some of the areas of concern he had when he moved to his bearish stance last year, though other fears linger.

Shares were up 0.5% in premarket trading Thursday.

“Although most of our primary concerns remain, three of these concerns have lessened or abated,” he wrote.

Notably, “AMD is no longer gaining PC share,” Rolland continued. “Intel is far more competitive today, with both Alder Lake and Raptor Lake benchmarking and selling well.”

He added that he’s spoken to experts who say that Intel “holds the price/performance crown” in the current PC market, suggesting to him that the company will either maintain or potentially gain share in that market this year.

Additionally, Rolland highlighted that Intel’s management team seems to be executing better.

“While Intel’s troubles at 10nm were well known, Sapphire Rapids was the latest roadmap push,” he wrote. “Our checks have not identified any new pain points and delayed products. No news is good news here.”

Furthermore, though Rolland was worried last year about a “hangover” in the PC market due to the work-from-home boom ending, he says that dynamic “has largely run its course.”

Still, Rolland declined to turn bullish on Intel’s stock, writing that “major issues remain” for the company, including softness in the company’s data-center forecast.

He did move to a bullish stance on shares of Qualcomm Inc.
QCOM,
+4.35%
and Skyworks Solutions Inc.
SWKS,
+3.61%,
upgrading both of those to positive from neutral. Rolland likes Qualcomm’s positioning as China pushes toward a reopening and smartphone trends improve there, and he thinks Skyworks could benefit from the reopening as well.