Intel data center weakness likely to continue into 2023, J.P. Morgan says
Investment firm J.P. Morgan believes Intel’s $Intel(INTC)$
Analyst Harlan Sur noted that overall demand for the data center should continue to grow this year, but the second-half of the year is likely to be stronger than the first, due in part to a bifurcation between high-performance compute and networking and general purpose compute and storage and memory.
"...[L]ook for companies levered to data center trends to outperform across high performance compute and networking (Nvidia) (NVDA), Marvell (MRVL) and Broadcom (AVGO) while general purpose compute and storage/memory likely to see [first-half] weakness Intel (INTC), AMD (AMD) Micron (MU) and Western Digital (WDC)," Sur wrote in a note to clients.
Sur added that cloud data center spending remained solid in 202, up an estimated 32% year-over-year, but growth is expected to slow down considerably to just 7% year-over-year in 2023.
Intel's (INTC) continued troubles in the PC space are well-known by now, but Sur said that the Pat Gelsinger-led company has continued to make progress on excess inventories and hopes to have it under control soon.
"For Intel, the team expects inventories to normalize between [third-quarter] and [fourth-quarter] as OEMs have taken the right actions to balance inventory with demand," Sur added.
Additional attention will be on the company's recently launched Sapphire Rapids CPU server upgrade, however, Sur noted.
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