Stocks fell sharply earlier this week after President Trump took aim at Fed Chair Jerome Powell, but markets rallied broadly after the famously mercurial chief executive walked those comments back. The rally gained further momentum when Treasury Secretary Bessent told investors at a JPMorgan Chase-hosted event that the developing U.S.-China trade war is likely to de-escalate, and sooner rather than later. He described the current high tariff barriers as ‘unsustainable’ in the long term.
Even better for the markets, Bessent went on to describe the Administration’s policy toward China as seeking a ‘rebalancing’ of trade. The Treasury head’s comments brought a sigh of relief to investors, who, more than anything lately, have wanted some sign of easing in the current uncertainty in trade policy.
With markets ticking up, investors are looking to buy – but just as important as knowing which stock to buy is knowing which stocks to avoid. The tech field has picked up more than its share of the headlines in recent years, but 5-star analyst Stacy Rasgon, from Bernstein, has been busy picking out the shares that he’ll take a pass on.
Chief among these are Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC). Both are well-known names in the semiconductor industry; Intel is a former sector leader that has slipped in the rankings, while AMD is a mid-ranking player making a move to increase its market share. But the top analyst won’t go bullish on them, so let’s find out why.
Advanced Micro Devices
AMD is a $153 billion semiconductor company with a long history in the PC market, making high-end processor chips. More recently, AMD has developed important footholds in the data center and gaming businesses. The company has built a solid reputation for quality, and is extending that reputation into the design, prototyping, and manufacture of accelerators and processors for the AI market.
AMD started this year with the release of new chip products for the AI track, as well as in the legacy PC business. These included new chips in the Ryzen line that are capable of running AI applications on consumer and small business PCs. In recent weeks, AMD has announced several new developments, including the use of the 5th generation EPYC processors in the new Google Cloud C4D and H4D virtual machines, and the announcement that the ‘Venice’ EPYC processor is the industry’s first high-performance computing product to be taped out and brought up using TSMC’s advanced 2nm (N2) process technology.
Earlier, in March of this year, AMD completed its acquisition of ZT Systems. ZT is an important provider of AI and general-purpose computer infrastructure for major hyperscale providers around the world; this acquisition puts AMD’s GPUs and CPUs into the mix, with applications in AI and cloud computing. AMD paid approximately $4.9 billion for ZT Systems, underscoring the importance of the acquisition to the company’s strategic plans.
AMD reported sound results in its last financial release, covering 4Q24. The quarterly revenue, of $7.7 billion, was both a company record and was up 24% year-over-year – and in addition, it beat the forecast by $170 million. The company’s bottom line, the non-GAAP EPS of $1.09, was in line with expectations. Zooming out a bit, we find that AMD’s full-year revenue for 2024, $25.8 billion, was also a company record.
While AMD has been reporting strong revenues, there are some hazy spots on the horizon ahead. Bernstein analyst Rasgon, in his notes on AMD, points that out, writing of the company, “Unfortunately for AMD the AI story, already somewhat tenuous, is likely to take another material haircut on the back of new China sanctions (note that every $1B is ~25 cents in earnings) and overall remains uncompetitive in our view. The core PC business appears to be exposed to channel effects (client shipments last quarter were higher than the peak of the COVID bubble already). Other markets like embedded could see near-term pull-forward but seem exposed to potential macro headwinds which could delay true recovery, and gaming may be heavily tariff-exposed. And while core market share performance remains solid the threat of a cornered, and hence more aggressive, Intel remains.”
“With numbers likely moving down materially (we are now close to $3 for the year and still well under $4 even excluding the charge), we remain comfortable on the sidelines,” Rasgon summed up.
Reflecting that view, Rasgon assigns a Market Perform (i.e., Hold) rating to AMD stock, along with a $95 price target, implying just a modest 1% upside from current levels. (To watch Rasgon’s track record, click here)
That said, Wall Street is a bit more optimistic. Of the 34 analysts who recently weighed in, 22 are backing a Buy and 12 are staying neutral, giving AMD a Moderate Buy consensus rating. The stock is currently trading at $94.13, and the average price target of $139.73 suggests it could rally nearly 48% over the next 12 months. (See AMD stock forecast)
Intel
Intel has long been a dominant force in the PC processor market, with its iCore series widely adopted across consumer and business systems. However, while the AI boom created rapid growth opportunities for its rivals, Intel remained focused on its core PC business and was late to pivot. That delay left it playing catch-up in one of the industry’s fastest-moving arenas.
Now under mounting pressure, Intel has started rolling out AI-capable chips, including models tailored for consumer PCs. Although it entered the AI race well behind competitors, Intel retains a critical structural edge: in-house chip manufacturing. This enables tighter control over production timelines and scalability. The company is also ramping up its foundry operations, supported in part by recent U.S. federal investment programs.
Expanding the in-house foundry is only one of the changes that Intel is working on. The company is also working under new leadership. New CEO Lip-Bu Tan took over in March, and is expected to try to shake things up at the firm. In a potential first wave of restructuring changes, Intel is reportedly planning to cut over 20% of its workforce, amounting to approximately 21,000 jobs.
Intel will be releasing its 1Q25 results today after the closing bell, and is expected to show a quarterly revenue total of $12.3 billion, which would represent a 3% decline year-over-year. For now, we can look at the company’s 4Q24 results to get a feel for its current position. In that quarter, Intel’s top line of $14.3 billion was down 7.4% from 4Q23 – although it came in $430 million better than had been anticipated. At the bottom line, Intel reported a non-GAAP EPS of 13 cents, a penny better than the forecast.
Even after the Q4 earnings beat, analyst Rasgon is cautious on this stock. Explaining his reticence to buy in, he says, “While we see potential for a bit of near-term upside on the back of tariff dynamics, we doubt anyone is going to buy the stock for it (the pull-forward narrative seems easy to make). In the meantime though new management has signed up for a challenge. It feels early to get ‘the plan’ from Lip-Bu at this point, though we might expect at least some hints, as well as potential for further cost cuts, but right now it seems the general idea is to continue along the path set by his predecessor (i.e. stem the bleeding, focus on both products and foundry, and try to get 18A out the door).”
“The environment feels less supportive however, with key end market products in the tariff crosshairs (and a China response that appears targeted at US national champions), a still-harsh competitive environment in core products, possible margin risks, and little to no AI story to help buffer things. The stock feels more like an event-driven narrative at this point; we would avoid it,” the analyst added.
To this end, Rasgon gives Intel shares a Market Perform (i.e., Hold) rating, with a $21 price target that suggests a nominal downside of 1.5% on the one-year horizon.
All in all, the 31 recent analyst reviews on INTC include just 1 Buy, 26 Holds, and 4 Sells, for a Hold consensus rating. The stock’s $22.40 trading price and $21.37 average price target together indicate room for a ~5% upside potential this year. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.