SAN FRANCISCO -- How long Morgan Stanley Dean Witter analyst Mark Edelstone can retain his crown as the Ax on chip stocks will depend on the outcome of some risky calls he's made lately. The riskiest call right now may be his staunch defense of Intel (INTC) - Get Report in the face of warnings about the PC market.

TheStreet.com

named Edelstone the

Ax on Intel in November after the stock had risen 37% in 2 1/2 months and was approaching a price target of 100, which Edelstone had set in April. Until that moment, Edelstone had played second fiddle to renowned

Merrill Lynch

analyst Thomas Kurlak who, for two years, cautioned investors against buying the stock. Kurlak

joined the

Tiger Management

hedge fund last month.

That 37% rise in Intel stock was only the beginning. By Jan. 11, the stock closed at 139 3/4, a 96% increase since the rebound began Aug. 30, and a 54% increase since Edelstone first set his target of 100. That was the week Intel announced fourth-quarter results that exceeded even the most bullish analyst projections, and analysts were falling all over themselves to raise their

price targets.

But warnings from two analysts early this week, Jonathan Joseph at

NationsBanc Montgomery Securities

and Charles Boucher at

Donaldson Lufkin & Jenrette

, sent the stock sinking 8% over a two-day period.

Edelstone responded Wednesday with a report that reiterated his strong buy on the stock. But the stock's 4.4% gain, compared to a 0.2% rise in the

S&P 500

the same day, could also be attributed to a similar reiteration from

BancBoston Robertson Stephens

analyst Dan Niles. Intel dropped another 1.2% Thursday, compared to a 1.5% rise in the S&P.

It isn't the first time that Edelstone has found himself defending his calls. On Feb. 2, he upgraded memory chip designer

Rambus

(RMBS) - Get Report

to outperform, when it was trading at 74 3/8; by Feb. 18, it dropped 24%. He responded with

positive comments Feb. 19 about Intel's support of Rambus. Rambus then regained 32%, and again the stock was bolstered by a similar reiteration from Niles. It closed Thursday at 69 5/8.

After communications chipmaker

Broadcom

(BRCM)

closed at 78 5/8 Jan. 11, Edelstone downgraded the call and the stock dropped 27% to 57 over the next eight trading days. But it bounced back 27% to 78 9/16 when the company announced surprisingly good fourth-quarter earnings, gave guidance for a good first quarter and announced a 2-for-1 stock split. Edelstone

told

TSC

at the time that he saw no reason to reverse his call. Since then, Broadcom has continued its slide, closing at 50 1/16 Thursday.

A prolonged slump in Intel stock could give NationsBanc's Joseph the opportunity to wrest the Ax crown from Edelstone. It's worth noting the past two times Joseph downgraded a stock. First, on June 18, he downgraded graphics chipmaker

3DFX

(TDFX)

to hold. That was a gutsy move -- and not only because Montgomery was a lead underwriter for the company. 3DFX has a rabid following among individual investors that could rival

Apple

(AAPL) - Get Report

mania, and Joseph was blasted on the stock chat boards for the call. But the stock subsequently dropped 51% by Sept. 15 compared with a 6.3% drop in the S&P 500 during that same time. Second, he cut

National Semiconductor

(NSM)

from a buy to a hold on Dec. 3, 1997; the stock then dropped 75% over the next 10 months.

Joseph doesn't downgrade a stock often, says

C.E. Unterberg Towbin

analyst Claude Hazan, who worked under Joseph for two years at Montgomery before leaving for Unterberg last year. "He's been accused of being a superbull," Hazan says, adding that he'd think twice before betting against him. "I think he has a real intuition about the stocks. I'll never forget how many times I thought he was making a wrong call and, sure enough, he'd turn out to be right."

That's not to say Joseph has a perfect record. After predicting National Semi's downturn, he incorrectly anticipated an upturn and upgraded the stock to a buy Dec. 3 when it was trading at 15 3/8. It closed Thursday at 10 7/16. Oops.

Joseph's Intel downgrade Tuesday came with harsh wording: "INTC is dead money at best, going into the summer." Double-ordering by PC makers -- to ensure themselves an adequate supply in case Intel couldn't meet full demand -- back in December would lead to order cancellations. Continued competition from

Advanced Micro Devices

(AMD) - Get Report

and National Semi would make for a damaging price war. These factors could send Intel's stock dropping to as low as 100 within the next six months, he wrote.

Edelstone's calls are closely followed by the buy side. Of several interviewed, two fund managers at

Thornburg Funds

and

Bridges Investment Counsel

say that they rely only on Edelstone's and their own in-house research. Others rely on a number of sell-side analysts. Jack Kunkle, a portfolio manager with

Muhlenkamp & Co.

, which manages about $280 million in funds and is long Intel, says he pays attention to both Edelstone and DLJ's Boucher.

And Renee Anderson, a portfolio strategist with

Invista Capital Management

, names a handful of people including Joseph,

Cowen & Co.

analyst Drew Peck, plus

Prudential Securities

analyst Hans Mosesmann and

J.P. Morgan

analyst Terry Ragsdale, but not Edelstone. (Of the investment banks mentioned, only Morgan Stanley has an underwriting relationship with Intel. DLJ is an underwriter of Intel rival Advanced Micro Devices, and AMD's CEO Jerry Sanders sits on DLJ's board.)

Whether the bulls or the bears turn out to be correct, Intel's future will become evident in the next 30 days. That's when consumers waiting for the release of the new Pentium III will buy new computers, says BancBoston's Niles. He thinks analysts like Joseph who are issuing dire warnings about Intel are blind to PC market conditions. Even those people who aren't going to buy the new Pentium chip are delaying purchases in anticipation of Pentium II price cuts. "Only an idiot would be out there buying a PC before that," Niles says.

The February and March sales numbers will show how strong the PC market is and how well Intel competes against its rivals, Niles says. As long as those sales numbers stay strong, so will Intel's stock.

If that's the case, then the bearish calls being made now will only strengthen Edelstone's position. After all, he's urging investors to buy now. If Intel rises, the 113 3/8 it closed at Thursday will look like a bargain.

As originally published, this story contained an error. Please see

Corrections and Clarifications.