Intel rally due to a ‘clear short cover trade underway in semis’ – Mizuho

Intel (NASDAQ:) shares are trading more than 5% above Friday’s close despite a lack of evident upside drivers. However, analysts at Mizuho believe there is a “clear short cover trade underway in semis.”

The investment firm said: “ARM ripped 8% Fri, AMD (NASDAQ:) up 5% and near 8% past week, and even ON up 8% in past week (likely on TSLA rally). If hedge funds long AI semis want to lower exposure and rotate into non-Semi longs, they will sell some NVDA, AVGO, MU and cover shorts.”

This would include AMD and Intel, according to Mizuho, noting that Intel’s “Q2 results already guided to below mid-point earlier in their quarter on China restrictions.”

“So the Q2 is the low point for GMs and EPS and stock was not breaking below $30 level,” they add. “Unless you were betting for a big guide down for Q3 or push out of the leading edge node based new products for PC, data center, then what is the incremental neg catalyst for downside? No LO [long only] investors like or want to buy INTC, so a true rebound beyond mid $30s is unlikely in my view in coming months.”

Overall, Mizuho believes INTC still looks unattractive and has a “lack of exciting growth.”

In regards to the INTC share price rise, some investors have speculated that it could be linked to the Semicon West conference that is set to take place between July 9 and 11.