Tablets are the real deal and they’re affecting the PC market, say Goldman Sachs analysts, in a note on Intel pithily subtitled “tablets impacting PC dynamics, servers slowing, avoid the stock.”
Goldman’s Intel analysts piggy back on a call from new Goldman hardware analyst Bill Shope who estimates that PC and server units will grow 8% and 5%, year-over-year, which is “well-below consensus estimates for low-teens PC growth.”
With PC [manufacturers] now engaged with [vendors that sell chips that rely on rival chip technology licensed by ARM Holdings] the software ecosystems at Apple and Android growing quickly, and Microsoft potentially enabling Windows for ARM, we believe Intel will face increased processor competition. Given Intel’s 3% dividend yield, resumed buyback, and the 81% increase in November short interest, we remain Neutral rated on the stock and prefer [Texas Instruments] in large-cap semis.
The Philly semiconductor index is down noticeable 0.8% Monday. As we’ve mentioned tons of times, the index of chip makers has long been considered something of a leading indicator for the broader markets. But notes such as Goldman’s seem to suggest that semiconductor industry leaders might be battling some structural shifts, which would seem to make us a bit more skeptical as to the measure’s usefulness on a cyclical basis.