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ERROR: type should be string, got "https://www.barrons.com/articles/buy-intel-dump-micron-advises-ubs-1522963364\nBuy Intel, Dump Micron, Advises UBS\nUpdated April 5, 2018 5:22 pm ET / Original April 5, 2018 5:06 pm ET\nThe chip industry is still a “cyclical” business, contrary to what some say, relates UBS’s Timothy Arcuri, and so, as he writes in his initiation of coverage of semiconductors today, you need to “pick your spots.”\nIntel Inc.\nArcuri begins his coverage with a Buy rating on Intel (INTC), along with recommendations for Broadcom (AVGO), Marvell Technology Group (MRVL), and chip-equipment maker KLA-Tencor (KLAC).\nHe’s less enthusiastic about analog chip giant Texas Instruments (TXN) and memory-chip giant Micron Technology (MU), rating them both a Sell. In the middle are eight stocks rated Neutral: Nvidia (NVDA), Teradyne (TER), Applied Materials (AMAT), Lam Research (LRCX), Qorvo (QRVO), Skyworks Solutions (SWKS), Advanced Micro Devices (AMD), and Qualcomm (QCOM), citing a variety of risks including “growth/transformation already priced in.”\nThe problem with the cycle is that it is “priced inconsistently,” writes Arcuri. Investors treat Nvidia as if it will be the “winner-take-all” in chips, but actually, \"the rising tide will likely lift all semis boats over time.” The caveat is that the cycle could still cause problems, especially for Micron’s memory chips.\nIn contrast to Stifel analyst Kevin Cassidy’s warning this morning that Intel’s server chip cycle is winding down, Arcuri is very upbeat about the market data-center chips for Intel both now and further out, writing that \"near-term, INTC stands to benefit from a strong new data-center product cycle (Xeon Scalable) set against easy compares and a very favorable IT spending environment.\"\nHe thinks investors are \"mispricing new growth opportunities around AI,\" a market that could \"lift all boats\" rather than Nvidia getting all the business.\nArcuri points out investors are undervaluing Intel’s data-center chips, at least relative to Nvidia: \"We have shown that, on a SOTP basis, INTC's DCG business is effectively being valued at only ~4-4.5x sales despite an incredibly favorable IT spending environment and multiple vectors of growth.\"\nAll of what he refers to as \"data-center adjacencies\"—technology Intel can sell as a result of selling server chips—could be worth $35 billion or so, he observes, \"yet little to no valuation seems to be ascribed to INTC for these same adjacencies despite what should be very solid presence.\"\nThere are weaknesses for Intel, such as its manufacturing roadmap, but he’s not convinced they’re as serious a risk as people think: \"INTC's mfg lead v TSMC is essentially gone but it is also not the end of the world.\"\nAs far as Micron, Arcuri’s complaint is that prices have to back off before sales can reach a steady state. But demand is still on the rise as long as artificial intelligence drives computing.\n\"Memory goes hand in hand with compute. If AI drives inflation in the value of compute, this has got to translate favourably for memory as well—DRAM for memory and NAND for storage markets,\" he writes.\n\"In the near-term, though, demand destruction has occurred because prices for DRAM and NAND both rose in C2017 by ~43% and ~14% Y/Y respectively.\n\"The industry has to drive pricing back down to access this demand elasticity, especially in these large compute and storage markets.”\nOn the brighter side, supply of memory chips is unlikely to surge and hurt prices, because capacity is constrained by manufacturing costs, he writes.\nAnother big theme these days increasingly is capital returns, writes Arcuri, less so M&A, which is in its later innings: \"Semis remains a directional bet on the economy and estimate revisions, but dividends and capital return have become a much more important driver as interest rates have been so low.\n\"With the M&A cycle in the space more toward the end than the beginning (there are simply relatively few companies with some semblance of a defensive technology moat that have not already right-sized open),\" he writes, \"there is little mystery that semiconductor companies as a whole will use formerly trapped cash to make deeper commitments around dividends and capital return.\"\nSign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning."