Analysts: Intel's growth potential is limited, despite the deal with Nvidia

Citi analysts lowered their recommendation on Intel shares from «Neutral» to «Sell,» while raising their target price from $24 to $29. The decision was made after the announcement of a partnership with Nvidia, which will invest $5 billion in Intel shares and jointly develop processors for AI platforms and PCs.

According to analyst Christopher Danley, the improvement for Intel will be minimal: even the integration of Nvidia graphics will not make its processors more competitive than AMD solutions, where the CPU remains the key factor.

In addition, Intel's participation in the release of processors for Nvidia AI platforms is estimated to be limited. The potential market is only $1-2 billion, which is about 3% of the company's projected sales in 2026.

Investors expect that the next stage will be a major production contract for Nvidia. However, Citi doubts this, pointing to Intel's technological lag behind TSMC by several years.

«Since the beginning of August, Intel shares have gained almost 50% due to the deal with Nvidia and expectations of a new production collaboration. But we believe that these hopes are excessive and the market has already priced in the success of an unlikely direction – advanced manufacturing,» the experts of the financial conglomerate say.