Intel, Qualcomm fall: investors booking gains or cautious about growing competition?

Intel and Qualcomm shares fell sharply on Thursday as investors pulled back from two of the biggest beneficiaries of the artificial intelligence-driven semiconductor rally, while analysts warned that competitive pressures remain intense despite surging enthusiasm around AI infrastructure spending.

Intel shares INTC declined nearly 3%, marking a third consecutive day of losses after a rally that has seen the stock more than triple so far this year.

Qualcomm dropped about 4.6%, extending weakness after the smartphone and communications chipmaker hit record highs earlier this week alongside Intel and Advanced Micro Devices.

The stocks witnessed declines despite the S&P 500 being in the green today.

The pullback comes after months of aggressive buying across semiconductor stocks tied to AI servers, cloud infrastructure, and data center expansion.

While analysts said some of the declines likely reflected profit-taking after a historic rally, concerns are also emerging about whether legacy chipmakers can defend market share as AI reshapes the industry.

Server market shifts intensify

UBS analysts said Intel continued to lose ground in the server processor market during the first quarter as rivals AMD and Arm-based chip providers expanded their presence in AI-related workloads.

“Arm and AMD units outgrew and continued to gain share at the expense of Intel,” UBS analyst Timothy Arcuri wrote in a research note this week.

According to UBS estimates, Intel’s share of server CPU units fell roughly 370 basis points to 54.9% during the quarter.

AMD gained 230 basis points to 27.4%, while Arm-based processors increased their share by 140 basis points to 17.7%.

The data highlights how AI computing is rapidly altering the competitive dynamics of the semiconductor market.

Arm-based chips, long dominant in smartphones, are increasingly gaining traction in servers because of their power efficiency and suitability for large-scale AI workloads.

UBS expects that trend to accelerate over the remainder of the decade.

“We believe the Arm instruction set will capture a disproportionate segment of this growth and reach 40-45% share of total units by 2030,” Arcuri wrote.

Even with intensifying competition, analysts expect the server CPU market to expand dramatically as AI adoption increases.

UBS forecasts the total addressable market for server processors will grow from roughly $30 billion (approx. R 513,6 billion) in 2025 to $170 billion (approx. R 2,9 trillion) by 2030.

Deutsche raises PT on Intel but keeps stock on 'Hold'

Despite market share concerns, some analysts have become more optimistic about Intel’s turnaround prospects.

Earlier this week, Deutsche Bank analyst Ross Seymore raised his price target on Intel to $100 from $63 while maintaining a Hold rating.

The target had already been increased from $45 in late April, reflecting growing confidence that Intel could benefit from rising AI infrastructure demand.

Still, Seymore stopped short of upgrading the stock to a Buy rating, signaling continued caution around the pace and durability of Intel’s recovery.

According to FactSet data, the average analyst target price for Intel stands at $92.60, making Deutsche Bank’s revised estimate among the more optimistic projections on Wall Street.

Qualcomm’s AI ambitions face scrutiny

Qualcomm has also attracted growing investor attention after announcing plans last month to expand deeper into the data center market.

The company disclosed that it had secured a deal with an unnamed hyperscaler customer and plans to begin shipments in the December quarter, raising hopes it could emerge as a meaningful challenger in AI infrastructure chips.

Investors are expected to focus closely on Qualcomm’s upcoming investor day on June 24 for further details about its data center roadmap.

“With the company’s recent datacenter announcements setting up a chance for Qualcomm to silence its critics with a combination of datacenter wins, roadmap announcements, and clarity on how its DC business is setup to be its next $10+ billion annual revenue stream,” Daniel Newman, chief executive officer of The Futurum Group, wrote on X.

“AI demand opened the door for Qualcomm, execution gives it permission to win a share of more than what will be a trillion+ of annual AI chip spend.”

Still, skepticism remains over whether Qualcomm can successfully diversify beyond smartphones while competing against entrenched AI chip players.

Tae Kim, author of “The Nvidia Way,” described Qualcomm as the “problem child of the current chip rally.”

“Qualcomm's core business is losing share at Apple while the Android market is in trouble,” Kim wrote on Substack.

“Its Windows processor business is about to get shellacked by Nvidia. The company is selling a hope and dream about future data center AI chips and CPUs at a time when there is a massive talent exodus to competitors and startups.”