Tumbling demand for personal computers is hurting Intel and Advanced Micro Devices , with further declines on the horizon, Citigroup said. Analyst Christopher Danely reiterated ratings of neutral on both chipmakers, while warning in a note dated Friday that he sees consensus downside for both. Intel’s price target of $30 implies an upside of about 17%. “We maintain our Neutral ratings on Intel and AMD as we believe there is more downside to the consensus estimates given collapsing PC demand,” he said in a note to clients. The technology sector has been hit hard during sell-offs in the broad market amid growing concerns of a potential recession in reaction to the Federal Reserve’s hikes interest rates. Computers are among big-ticket purchases seeing weaker demand as consumers shift spending from goods to services, and now cope with rapid inflation as well. Shipments of notebook computers were up 12% in September compared to the prior month – below Citi’s expectation of 23%. Shipments were up 3% in the third quarter compared to the second, again coming in below Citi’s forecast of 7%. Citi lowered its fourth-quarter notebook shipment estimate to down 9% quarter over quarter, from up 6%. Retail trends have shown demand starting to cool from the pandemic-induced surges. Between 2020 and 2022, consumers looked to goods while economic shutdowns limited spending on experiences and services. The next big retail sales report is scheduled for Friday when September numbers are released. But in some instances, including computers, demand is still higher than pre-pandemic. Citi now forecasts a 22% decline for 2022 compared to the year before, which is more than the 18% previously expected. Even at that new estimate, however, notebook shipments are still up 18% compared to before the pandemic. AMD was down more than 1% at a new 52-week low midday and has now plummeted more than 60% for the year thus far. The chipmaker cut its sales forecast , citing the decline in PC demand as well as supply chain issues, last week. Intel is weaker by almost 2% on the day and more than 50% this year. — CNBC’s Michael Bloom contributed to this report.
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