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Bernstein’s Stacy Rasgon, reiterating an Underperform rating on Intel (INTC) and a Market Perform rating on shares of Advanced Micro Devices (AMD), writes today that despite some bright spots for both companies, he wouldn’t recommend buying on what is merely “tactical” strength.

Intel is set to report results this Thursday, after the closing bell, while AMD is to report next Monday, May 1st.

Intel, notes Rasgon, has the benefit of an improving PC market, as others have pointed out.

However, effecting for an extra week a year ago, he’s not that impressed:

For Intel, we are in-line for Q1 ($14.8B/$0.65, same as consensus) and roughly in-line for Q2. While some investors have gotten more excited about improving (or at least stabilizing) PCs, we note the presence of an extra week in the year-ago quarter. Appropriately accounting for it suggests the Street is already modeling client revenues up decently YoY (up 9-12% YoY vs nominal up 5%). And datacenter (corrected for the same factor) is modeled up very strongly (up 13-17% YoY vs ~9% without accounting for the extra week) which could bring risk of disappointment. Overall however memory is likely to support/drive upside to numbers (with Street estimates for Intel's NAND results anemic when compared to industry dynamics and the fact that Intel is ramping their fab); as a result, we believe numbers are OK (and could show near-term upside) though it remains to be seen how much investors will want to pay for memory-driven strength.

Rasgon thinks there is a "structural case” that may eventually support Intel, but it’s not really there yet: "

We recently downgraded Intel's stock to Underperform on a structural, rather than tactical, call (though most of the pushback we have received has been the opposite). Tactically we agree that numbers (for now) appear OK, though with strength likely mostly from memory we don't judge the upside risk to be huge. We are already seeing signs of the structural case building (witness for example the recent Mobileye acquisition, or Microsoft's embracing of ARM in the datacenter) and believe we will see more over time; the structural case may take some time to build but feels increasingly inevitable to us.

As for AMD, while it may have some success with its “Ryzen” processors, Rasgon notes there’s now a very high bar for the company to cross in order not to disappoint:

For AMD, we are roughly in-line with consensus for the quarter ($986M/-$0.04), as well as for Q2. We note that "hopes and dreams," while not a call we have been prepared to make, has still been a good one over the last year. But we believe the days of hopes and dreams are drawing nigh; given Q2 should hold a full quarter of Ryzen desktop shipments, and Vega (high-end GPU) & Naples (servers) will be launching, we believe the guide likely needs to be materially above the Street (either on revenue, gross margins, or preferably both), in order to hold and add to gains given high expectations. We would like to believe, but we have too much history with their execution to feel comfortable with it; we remain sidelined.