Intel Corporation (INTC): Bear Sizes Up the Negative Implications of Apple (AAPL) Transition to Custom Processors

Hans Mosesmann sees a potential Apple exit from INTC chips to internal processors as a sign the AAPL machine believes its solutions are "better."

What could be in store should rumors be right- and Apple (NASDAQ:AAPL) really does turn away from x86 Intel Corporation (NASDAQ:INTC) chips to using internal processors?

Rosenblatt analyst Hans Mosesmann shares his two cents as a bear on Intel, not surprised in the least; after all, this talk of Apple choosing custom ARM-based SoC processors in its series of Mac computers is certainly “not a new narrative.”

Keep in mind, Mosesmann writes, Apple has been using custom processors in its iPhone as well as its iPad units for years now.

There are those on the Street standing up for Intel, betting that an Apple departure would merely impact sales in the low-to-mid single digits- and will not be transpiring any time soon. Moreover, the Intel defense finds Apple’s CPUs will not perform as well as Intel, leaving bulls to say, “move along and buy INTC shares,” the analyst says.

However, Mosesmann’s take is different than those confidently making a case for Intel. The analyst finds, “Strategic OEMs like Apple have access and unique visibility into silicon ‘roadmaps’ and their peek into Intel’s would perhaps show something that is suspect. If the roadmap was compelling you just wouldn’t make that move we believe.”

Moreover, “Speaking of roadmaps we may not hear of a cogent one from Intel until the analyst day, which we believe has not been scheduled for 2018. Odd. It is possible that an analyst investor day from Intel is a 2019 thing and understandable given the organizational flux, but this possibility likely does not inspire confidence,” continues the analyst.

“Apple’s potential move also highlights the restrictions and vulnerabilities imposed on Intel CPUs of a decelerating Moore’s Law. So, Apple’s move indicates not only that it is viable to use ARM-based solutions because they are better, but it also indicates that data center players are entering an environment more open to alternative architectural approaches than history would suggest,” concludes Mosesmann, ultimately sizing up negative implications ahead in terms of a prospective Apple move away from this chip giant.

Therefore, the analyst reiterates a Sell rating on INTC stock without suggesting a price target. (To watch Mosesmann’s track record, click here)

In the bigger picture, TipRanks indicates a lot of optimism hovering above the chip giant’s name. Consider that out of 25 analysts polled in the last 3 months, 17 are bullish on Intel stock, 7 remain sidelined, while 1 is bearish on the stock. With a return potential of nearly 11%, the stock’s consensus target price stands at $54.25.

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