Barclays upgraded Intel (INTC) to Overweight from Equal Weight and downgraded another chip maker, Cypress Semiconductor (CY), to Equal Weight, contending that Intel should benefit from improving PC trends, while Cypress's gross margin turnaround is taking longer than expected.

INTEL: Intel should "return to sustainable growth," driven partly by improving PC trends and double digit percentage server growth, wrote Barclays analyst Blayne Curtis. Additionally, the company's diversification into new areas, including mobile, memory and the Internet of Things, should give it a boost, the analyst contended. Moreover, with one of the cheapest valuations of any large cap stock, Intel's valuation is "compelling," according to Curtis, who set a $45 price target on the shares.

CYPRESS: Cypress' gross margins are taking more time than expected to rebound, and the company's acquisition of Broadcom's (AVGO) Internet of Things business increases its risk, Curtis warned. Noting that analysts expect the company's Q1 growth to surpass usual seasonal trends, Curtis believes that its results could miss expectations. He kept an $11 price target on the stock.

WHAT'S NOTABLE: Intel is scheduled to report its Q3 results after the closing bell tonight, October 18, with a call scheduled for 5:00 pm ET. Cypress is expected to report Q3 earnings after the close on October 27.

PRICE ACTION: In early trading, Intel rose 1.5% to $37.85 and Cypress Semi slid 0.6% to $10.67.