RPT-UPDATE 1-RESEARCH ALERT-Wedbush starts Intel on buy

(Repeats without any changes to text) (Changes source, adds details, share movement)

By Saumyadeb Chakrabarty

BANGALORE, April 9 (Reuters) - Wedbush Morgan Securities began coverage of Intel Corp (INTC.O) with a "buy" rating, saying the largest maker of computer processors would continue to gain from rival Advanced Micro Devices' recent stumbles and a slew of upcoming product launches.

The brokerage also started coverage of Advanced Micro Devices Inc (AMD.N) and graphics chipmaker Nvidia Corp (NVDA.O) with a "hold" rating.

"Intel is in a position of fundamental strength and has continued to capitalize on AMD's recent stumbles," analyst Patrick Wang said in a research note.

AMD had a hiccup with the much-anticipated Barcelona chip due to a flaw that caused errors in some computer applications. It also lags Intel in chipmaking technology and could be about nine months behind Intel when it introduces chips with elements as small as 45 nanometers.

Wang said Intel has further established its presence in server and desktop markets and is on track to launch its Montevina processors for notebooks in early June.

Montevina is a processor system that combines integrated Wi-Fi and WiMax wireless technologies.

Wang said he was optimistic about Intel's Nehalem -- chips with up to eight processing cores -- and on the growth prospects for Atom, chips designed for mobile Internet devices.

Intel has some 80 percent of the global microprocessor market share but with the desktop PC sales maturing, it is looking at new markets for growth beyond the rapidly expanding notebook PCs.

Earlier in the day, UBS cut its first-quarter revenue estimate for Intel by 2 percent based on recent industry data and macroeconomic weakness.

Wedbush's Wang has a price target of $25 on Intel's shares, which were down about a percent at $20.90 in afternoon trade on Nasdaq.

WORRIES AT AMD

Wang began coverage of Advanced Micro Devices with a "hold" rating and price target of $7, saying the company was hit by weaker-than-expected sales in desktop and server markets and inventory accumulation at original equipment manufacturers.

Earlier this week, AMD said it would cut 10 percent of its workforce, and gave a first-quarter revenue estimate below expectations.

AMD shares were up 10 cents at $6.13 on the New York Stock Exchange.

Wang also started Nvidia, which makes chips to enhance display of graphics, with a "hold" rating and target price of $23. Shares of the company were up a percent at $19.32 on Nasdaq.

The analyst said Nvidia will face challenges in the coming quarters due to slackening macro-related demand for desktop graphics and notebook share losses on Montevina. (Additional reporting by Sreerupa Mitra; Editing by Deepak Kannan)