Wells Fargo & Co. (NYSE: WFC) lowered its rating of Intel (NASDAQ: INTC) shares to market perform from outperform on Friday. The firm said that Intel is facing weakening demand in 2019 and rising competition against Advanced Micro Devices (NASDAQ: AMD), according to CNBC.
Intel shares edged lower by 1.7% on Friday morning.
“Weak semi demand data points thus far in 2019, coupled with an expectation of cautious outlooks into [the second quarter of 2019], leave us to consider some downside risk” to estimates for the first half of the year for Intel shares, Wells Fargo analyst Aaron Rakers wrote in a note to investors.
Rakers noted that Wells Fargo is taking “a more cautious view” towards semiconductors ahead of first-quarter financial results. He also highlighted that Intel has “tough” sales to meet this year.
“Investor sentiment could become more tempered amid increasing visibility into AMD share gain momentum,” Rakers said.
In AMD’s previous quarterly results, the Company reported earnings of USD 8 cents on revenue of USD 1.42 Billion. Analysts expected earnings of USD 8 cents on revenue of USD 1.44 Billion. For the first quarter of 2019, AMD expects revenue of USD 1.25 Billion, plus or minus USD 50 Million, increasing 24% year-over-year. The possible decline will be due to lower graphics sales, absences of blockchain-related GPU revenue, and lower memory sales.
AMD also said it expects semi-custom revenue to be lower while Ryzen, EPYC, and Radeon datacenter GPU product sales are expected to increase.
South Korean tech giant Samsung Electronics released its first quarter earnings guidance on Friday and warned that profits likely fell by 60%. Samsung said that weakness in demand for memory chips and displays caused profits to plunge year-over-year.
Previously, Samsung also issued two other warnings within 2019 about declining profits. Similarly, other tech giants such as Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL) are also witnessing declining demands. Nvidia and Apple both said that weakness in China and ongoing global economic slowdowns are decelerating their business operations.
AMD shares have skyrocketed by 56.5% this year, while Intel lagged behind, increasing by 17.3% year-to-date.