"Over the next six months, their costs should decline more rapidly than pricing, which means their gross margin will go up," Herskovitz said.
There's another reason to be positive on Intel, said Scott Lawson, an analyst at Banc of America Capital Management, which owns Intel shares and manages US$280 billion.
While the stock has rallied since last year, it hasn't kept pace with other semiconductor shares of late. Intel fell 2 percent the past month, while the Philadelphia Semiconductor Index of 17 chip shares rose 14 percent, suggesting Intel may have more room to gain than its rivals if the economy rebounds and computer sales pick up.
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