Collins Stewart starts Intel, AMD with buy

A model poses with a laptop fitted with the new Intel Centrino 2 processor during its launch in Taipei July 15, 2008.

(Reuters) - Collins Stewart began coverage of Intel Corp (INTC.O) and Advanced Micro Devices (AMD.N) with a "buy" rating and said Intel's revamped processor product portfolio should enable the company to grow market share and offset macro headwinds.

Analyst Ashok Kumar said AMD was tracking slightly ahead of Wall Street expectations on both revenue and profit for the September quarter, supported by momentum in servers and graphics.

Kumar believes that any gains would come from miscues at Nvidia Corp (NVDA.O) as the company would continue losing share to Intel in the core processor business.

"Lower expenses could support upside in operating income, but break-even remains a stretch goal," he added.

On Intel, analyst Kumar expects the company's Atom family of processors, targeted at the low cost space, to offset any weakness in its mainstream products stemming from weaker IT spending.

The analyst set a price target of $28 on Intel and $8 on AMD.

Shares of Intel were trading down 36 cents at $21.19 Thursday on Nasdaq, while those of AMD were trading down more than 2 percent at $6.01 on the New York Stock Exchange.

(Reporting by Aftab Ahmed in Bangalore; Editing by Anil D'Silva)