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The most dramatic call you’ll see today: A big fat SELL rating on Intel from Goldman Sachs.A blue chip firm putting such a negative rating on a blue chip stock that’s been doing great always deserves some attention.
Here are the key points behind the rating from Goldman’s James Covello:
- The 22% M/M growth in the stock post-earnings is way out of line.
- Processor shipments are going to slow over the course of the year, in part because processors have been outselling PCS, and thus there’s a catch-up effect.
- Due to average selling price declines and excess capacity, 2012 sales will be flat.
- Increased competition from ARM-based processors in tablets will also hit the company.
In a related note, Goldman also has bearish commentary on the rest of the semiconductor industry:
- Inventory at all notebook makers are growing.
- 2010-2012 period is seeing huge capacity increases for the whole industry that will lead to oversupply.
- During past cycles, equipment orders declined in each of the past two quarters following the cyclical peak.
The firm also downgraded KLA to Sell and Applied Materials to Neutral.