Northland downgrades Intel to Market Perform on valuation concerns
The firm assigns no price target and forecasts a decline in datacentre spending for 2027, contrasting with Melius Research’s recent upgrade to Buy.
Northland downgraded Intel Corporation from Outperform to Market Perform on May 26, citing valuation concerns as the primary driver for the move. The firm did not assign a price target to the semiconductor giant, marking a shift in its stance on the company’s near-term equity appeal.
The analyst acknowledged that Intel is demonstrating measurable progress in its broader turnaround efforts. Northland expects earnings estimates to rise as demand for server central processing units improves, reflecting a positive outlook on the company’s operational trajectory in the short to medium term.
However, the firm introduced a longer-term headwind, anticipating a decline in overall datacentre spending in calendar year 2027. This forecast is attributed to cash constraints among hyperscalers, who are the primary purchasers of enterprise computing infrastructure.
The downgrade stands in contrast to actions taken by Melius Research earlier in the month. On May 18, Melius raised its price recommendation on Intel to $150 from $100, reiterating a Buy rating. Melius cited “incrementally good” conditions for memory and artificial intelligence semiconductor companies, despite noting no specific incremental positives resulting from President Trump’s visit to China.
Melius also raised long-term estimates and targets for several other semiconductor stocks, including Micron, Sandisk, AMD, and Marvell, alongside Hold-rated Qualcomm. The firm maintains that semiconductor companies are positioned to gain market capitalisation or offer greater upside compared with traditional software companies and non-semiconductor firms within the “Mag 7” over the long term.
Intel’s business operations are segmented into Intel Products, which encompasses the Client Computing Group and the Data Center and AI segment, as well as Intel Foundry and All Other. While the company remains a significant player in the global semiconductor landscape, analyst views on its valuation and growth potential continue to diverge.
