Intel Hits 52-Week High; Is PC Tailwind Is Sustainable?

Intel (NASDAQ: INTC) shares soared Wednesday on earnings news, but analysts were sounding cautious.

"Intel's shares are acting as if the PC market had returned to stable growth and real success is being seen in tablets and smartphones," Ascendiant Capital's Cody G. Acree said in a note.

Late Tuesday Intel said its strong results and outlook were driven by increasing sales related to personal computers and data centers.

Intel hit a 52-week high Tuesday, trading recently at 34.43 a share, up 8.9 percent.

But Acree expects the PC market to return to mid single-digit declines in 2005, leaving not much cheer for Intel.

Further, Intel's efforts to break into the tablet market "will bear little fruit," Acree said. As the tablet market slows to the single digits and Intel removes its product subsidies, "we expect its market share will significantly decline."

Agree forecast third quarter earnings of 63 cents a share on revenue of $14.38 billion. The consensus calls for $0.56 cents a share on revenue of $14.04 billion.

Wells Fargo's Maynard Um said although Intel's results suggest a continued tailwind from the PC market, a survey suggests that corporate priorities for acquiring new PC equipment has declined recently .

"Consumer markets remain weak and we remain cautious in developed markets as a shift later this year to smartphones and wearables may limit discretionary dollars for PCs" Um said.