Intel Results Boost Confidence in Microsoft $INTC $MSFT PRICE TARGET $32

Credit Suisse reiterate a Outperform rating on INTC based on our belief that the company is well positioned to benefit from (1) Rebound in enterprise IT spending (60%+ of revs) driven by an aging corporate desktop (~5 yrs) and notebook (~4 yrs) installed base, (2) Accelerating PC growth especially in emerging markets, (3) Strong Nehalem driven server cycle in volume (Dual-Processor or Nehalem/Westmere EP) and high performance (Multiprocessor or Nehalem EX), and (4) Ramp of higher margin 32nm products in 2010/11 with manufacturing, cost and performance advantages over competition. Concerns on the stock continue to be dominated by inventory double ordering, weak enterprise PC demand, weakening product mix driven in part by Intel Atom’s “goodenough” computing and the mix-shift towards consumer PCs, and lastly, increased
competition from ARM processor based low-end netbooks.

NVDA Corporation

Investment Thesis

• We believe that Nvidia is in the midst of navigating a changing revenue profile, driven by competitive pressure from Intel and AMD in its chipset and discrete GPU businesses, and emerging growth in its Tegra and
Tesla businesses.

• We are concerned that Nvidia will find it difficult to maintain share in GPU products, due to AMD/ATI’s aggressive pricing, a mix shift to the
low end, and competitive pressure from Intel.

Key Value Drivers

• Penetration of workstation, handset, and new GPU compute markets.
• Gross margins.
• Strategy changes, or new product announcements, including potential
entry into the PC microprocessor (MPU) market.

Potential Catalysts

• Announcements about major new products or design wins in the mobile handset market.
• Fast ramp of 40nm products.

Potential Risks

• Slower than expected ramp of Intel’s new integrated MPU+GPU products.
• Unexpectedly strong consumer demand environment leading to
inflated GPU sales.
• Faster than expected ramp of Tegra, at higher than expected gross
margins.

FULL REPORT HERE