TLDR
- Citi analyst Atif Malik upgraded Intel (INTC) from “Sell” to “Neutral” with $50 target as TSMC’s packaging constraints create foundry opportunities.
- Intel stock surged 139% in past year and 107% in six months, hitting 52-week high of $50.39 on January 15.
- Q3 results beat estimates with $13.65 billion revenue, turning profitable with $0.23 EPS versus $0.46 loss year prior.
- Major deals include $8.9 billion U.S. government investment, $5 billion Nvidia stake, and $2 billion SoftBank investment.
- Wall Street consensus remains “Hold” with $39.62 average target, though KeyBanc sees $60 upside on foundry progress.
Intel received a rating boost from Citi analysts this week after Taiwan Semiconductor reported blowout fourth-quarter earnings. The upgrade reflects growing belief that Intel can capitalize on manufacturing constraints hitting its larger rival.
Citi analyst Atif Malik lifted Intel from “Sell” to “Neutral” and set a $50 price target. The move hinges on TSMC’s tight advanced packaging capacity. Malik believes Intel faces a “unique window of opportunity” to win foundry customers as competitors scramble for production slots.
U.S. government backing strengthens Intel’s case. The Trump administration invested $8.9 billion in common stock, creating incentives for chip designers to consider domestic manufacturing options.
Intel stock has staged a comeback over the past year. Shares climbed 139% in 52 weeks and 107% over six months. The stock peaked at $50.39 on January 15 before retreating 6% from that high.
CEO Lip-Bu Tan spearheaded the turnaround through aggressive restructuring and cost reductions. The company refocused on AI processors while securing major partnerships. Nvidia bought a $5 billion stake as part of a deal to develop custom data center and PC products. SoftBank added another $2 billion investment.
Foundry Strategy Takes Shape
Three factors support Intel’s foundry ambitions. TSMC’s packaging shortage opens immediate opportunities. Government investment encourages domestic chip production. Custom AI chip designers need alternatives when TSMC capacity fills up.
Intel’s 18A manufacturing process entered production successfully. Panther Lake chips using the new node began shipping in laptops this month. KeyBanc analysts estimate 18A yields hit 60% and continue improving at standard industry rates.
The progress proves Intel can deliver competitive manufacturing. Chip designers struggling to secure TSMC slots now have a viable alternative. AI ASICs represent the biggest growth area. Companies like Alphabet, Amazon, and Microsoft design proprietary AI chips. Expanding AI use cases will drive demand for inference capacity, potentially routing business to Intel Foundry.
Third-quarter results demonstrated momentum. Revenue increased 3% year-over-year to $13.65 billion, beating the $13.14 billion consensus. Non-GAAP gross profit jumped 128% to $5.46 billion. The bottom line swung from a $0.46 loss per share to $0.23 profit.
CPU Challenges Remain
Malik stopped short of a “Buy” rating due to CPU business concerns. Panther Lake generated buzz at CES but won’t reach desktop systems. Arrow Lake handles desktops until Nova Lake arrives in late 2026, but Arrow Lake disappoints in gaming benchmarks. The planned refresh won’t address core performance issues.
AMD continues grabbing PC and server market share. Qualcomm pushes Arm-based PC chips, though compatibility problems slow adoption. Memory chip prices pose another headwind. AI data centers consume massive quantities of memory, forcing manufacturers to shift capacity toward HBM production. Higher memory costs could suppress PC sales and complicate Intel’s recovery.
Other analysts took varied positions recently. RBC Capital started coverage at “Sector Perform” with a $50 target, citing healthy PC and server demand. UBS lifted its target from $40 to $49 while maintaining “Neutral.” KeyBanc upgraded to “Overweight” with a Street-high $60 target based on manufacturing advances in AI chips. Melius Research upgraded to “Buy” at $50, noting Apple and Nvidia might use Intel’s 14A node for 2028-2029 production.
Analysts project Q4 fiscal 2025 loss per share at $0.02. Full-year 2025 loss should narrow 84% to $0.14 before improving to $0.17 profit in fiscal 2026.
Among 43 analysts tracking Intel, four rate it “Strong Buy,” one “Moderate Buy,” 33 “Hold,” one “Moderate Sell,” and four “Strong Sell.” The mean target of $39.62 implies 16% downside, while KeyBanc’s $60 target suggests 28% upside. Intel trades at 3.9 times sales compared to the 3.5 times industry average, with a $224 billion market cap.
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