Goldman Sachs: Sell Intel Now

intel paul otellini

The most dramatic call you’ll see today: A big fat SELL rating on Intel (NASDAQ:INTC) from Goldman Sachs (NYSE:GS).

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 (NASDAQ:ARMH) processors in tablets will also hit the company.

In a related note, Goldman (NYSE:GS) also has bearish commentary on the rest of the semiconductor (NYSE:SMH) 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 (NASDAQ:KLAC) to Sell and Applied Materials (NASDAQ:AMAT) to Neutral.

Read more at Business Insider.