This article first appeared on GuruFocus.
Intel (NASDAQ:INTC) shares fell about 3% on Monday morning after analysts warned that artificial intelligence trends could put pressure on the company’s core PC and semiconductor businesses.
Wedbush Securities highlighted that memory prices have soared, driven by demand for artificial intelligence infrastructure, putting cost pressure on traditional PC and mobile phone manufacturers. Memory accounts for approximately 20% of a typical PC’s bill of materials. Analysts said rising DRAM and NAND prices could push up Intel’s production costs, while competitive pressures could prevent them from offsetting the price increases.
The company also noted that shifts related to artificial intelligence are benefiting companies such as Nvidia (NVDA) and Advanced Micro Devices (AMD), which are positioned to supply chips for next-generation data centers. In contrast, Intel may face slower growth in its traditional PC and server products as hyperscalers prioritize newer platforms.
Wedbush warned that the broader impact of artificial intelligence on computing hardware could squeeze profits from Intel and other traditional players, adding to uncertainty about near-term results.
