SAN FRANCISCO, Jan 9 (Reuters) - Shares of Advanced Micro Devices Inc AMD.N tumbled 10 percent on Wednesday after brokerage Goldman Sachs said Intel remained its top pick among semiconductor stocks for 2008 and could keep racking up market share gains against its smaller rival.
The brokerage, which maintained its $30 price target on Intel shares, said it expects the company to deliver solid 2007 fourth-quarter results.
It also said Intel’s 2008 first-quarter and full-year margin forecasts would likely top Wall Street estimates.
Goldman kept its "buy" rating on Intel Corp (INTC.O), even as it removed the Silicon Valley company from a collection of stocks the brokerage calls its "technology framework." Goldman noted that Intel shares have fallen more than the Standard & Poor's 500 index .SPX since last July.
“While we are cognizant of the macroeconomic concerns in the U.S. and Europe potentially negatively impacting Intel’s fundamentals, we expect strong growth in the emerging markets (particularly in notebooks) to provide a cushion against a slowdown in spending in the U.S. and Europe,” the brokerage said.
AMD, which gained considerable ground against Intel in 2005 and 2006 before stumbling badly last year, has struggled with product delays and an inability to ramp up manufacturing of a key chip, code-named Barcelona, that it had said is key to reversing its fortunes.
“Intel is very well positioned to continue to gain (market) share, particularly in servers, given AMD’s disappointing execution,” Goldman analyst James Covello wrote in a report.
Intel sold off in the first few trading days of 2008, along with other chip and technology stocks, amid growing concerns that the United States is headed for a recession. Goldman said on Wednesday it expects a recession this year.
“We believe that the recent sell-off in Intel’s stock on near-term demand concerns is overdone,” Covello wrote, adding that he recommends “aggressive” purchase of Intel stock at current price levels.
Intel was one of the few stocks in the Philadelphia Semiconductor Index .SOXX that rose on Wednesday. Its shares were up 11 cents at $22.37 in midafternoon trade, after earlier rising as high as $22.87.
AMD was off 60 cents at $5.40. The Philadelphia Semiconductor Index was down 1.7 percent. (Reporting by Duncan Martell; Additional reporting by Tenzin Pema in Bangalore; editing by John Wallace)