11:43 AM EDT, 11/01/2024 (MT Newswires) -- Intel ( INTC ) beat Wall Street forecasts with its fiscal Q3 sales, reporting a smaller-than-expected decline from year-ago levels, but a "lukewarm" outlook by the chipmaker for 2025 likely will help keep a lid on its stock performance, analysts at BoA Securities said in note on Friday.

Intel's ( INTC ) manufacturing process continues to struggle, with its outsourcing to Taiwan Semiconductor Manufacturing likely expanding over the next several quarters, the analysts said. Intel ( INTC ) also lacks traction with artificial intelligence and AI accelerator products, with sales of chips used in personal computers and data centers both flat year-over-year compared with 40% and 25% growth, respectively, for rival Applied Materials (AMAT), they said.

The BofA analysts reiterated their underperform rating for Intel ( INTC ) shares with a $21 price target, suggesting an overall market capitalization of around $89 billion. The company's relatively upbeat Q4 forecast similarly supports near-term relief, they said, but its guidance expecting 3% to 5% growth in 2025 is significantly below consensus views that had been looking for a 7% to 8% increase next year.

Intel's ( INTC ) startup costs for its next generation 18A foundry process also "could get worse" before demonstrating many benefits, the BofA analysts said, noting it has yet to "get any external validation from any large fabless customer."

Intel ( INTC ) shares were more than 8% higher in recent Friday trading.

Price: 23.27, Change: +1.75, Percent Change: +8.13