Intel’s shares are experiencing a more than 5% increase, with no clear bullish drivers in sight. Mizuho analysts suspect that a short-covering operation is underway in the semiconductor sector, as evidenced by the recent rise in ARM, AMD, and ON stock prices. The firm suggests that hedge funds may be looking to reduce exposure to AI semiconductors and shift towards non-semiconductor investments, leading them to sell positions in companies like NVIDIA, Broadcom, and Micron, while covering shorts in AMD and Intel.
Mizuho points out that Intel’s second-quarter results were already expected to be below expectations due to China restrictions, making it the low point for CEOs and earnings per share. Unless there are significant negative catalysts in the future, such as a drop in Q3 or a shift towards new edge node-based products, the analysts do not see a reason for Intel’s stock to drop below the $30 level. They believe that investors are interested in buying Intel stock, but a rally beyond $35 in the near future is unlikely.
Overall, Mizuho finds Intel to still be unattractive and lacking in exciting growth prospects. While some investors speculate that the recent increase in Intel’s stock price could be related to the Semicon West conference held between July 9 and 11, the firm remains cautious about the stock’s long-term potential.
In conclusion, Intel’s recent stock price increase may be driven by a short-covering operation in the semiconductor sector, as suggested by Mizuho analysts. Despite this increase, the firm believes that Intel still lacks attractive growth opportunities and may not see a significant rally beyond $35 in the near future. Investors should be cautious about the stock’s long-term prospects, especially given the uncertainties surrounding the semiconductor industry.
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https://www.investing.com/news/stock-market-news/intel-rally-due-to-a-clear-short-cover-trade-underway-in-semis–mizuho-432SI-3510637
