TLDR
- HSBC downgraded Intel stock to Reduce (equivalent to Sell) from Hold, raising price target to $24 from $21.25
- Intel shares have surged 55% since August following deals with SoftBank ($2B), U.S. government ($8.9B for 10% stake), and Nvidia ($5B)
- Analyst Frank Lee believes the recent rally is overdone and unsustainable despite the new investments
- HSBC notes that only a technology sharing deal with TSMC would truly matter for Intel’s foundry business, but such agreement appears unlikely
- 76% of Wall Street analysts rate Intel as Hold, with average price target of $26.70 suggesting 28% downside from current levels
Intel shares dropped 2.1% in early trading Wednesday after HSBC downgraded the stock to Reduce from Hold. The move comes despite the chip maker securing three major investment deals in recent months.
HSBC analyst Frank Lee raised his price target to $24 from $21.25 but said the recent rally has gone too far. Intel shares closed at $36.40 on Wednesday.
The stock has jumped 55% since August when SoftBank announced a $2 billion investment in the company. Intel has climbed 85% year-to-date through Tuesday’s close.
Lee said the shares’ recent rerating was unsustainable. He pointed to execution at Intel’s fabrication plants as the key factor for any real turnaround.
The flurry of deals started with SoftBank’s $2 billion investment in August. Japanese technology conglomerate SoftBank bought shares at a discounted price as part of the agreement.
Government Backing Drives Investor Interest
The U.S. government followed with an $8.9 billion investment for a 10% stake in Intel. This deal represented a vote of confidence in the struggling chip maker’s turnaround plans.
Most recently, Nvidia announced a $5 billion investment at a purchase price of $23.28 per share. The two companies will co-develop custom data centers and PC products as part of the arrangement.
All three investments were made at prices below current market levels. Intel sold 86,956,522 shares to SoftBank at $23.00 each in a private placement.
Lee noted that only a technology sharing deal with Taiwan Semiconductor Manufacturing would truly move the needle. Such an agreement could revamp Intel’s foundry business, he said.
However, the analyst believes this type of partnership with TSMC appears unlikely. He said the opportunity from the Nvidia deal remains hard to measure due to lack of visibility.
Wall Street Consensus Points Lower
The broader analyst community shares HSBC’s cautious view. FactSet data shows 76% of analysts rate Intel shares as Hold.
The average Wall Street price target stands at $26.70. This implies 28% downside from current trading levels.
Deutsche Bank recently raised its price target to $30 from $23 while maintaining a Hold rating. Bernstein kept its Market Perform rating with a $21 price target.
Intel has been in talks with several potential partners beyond the announced deals. Reports suggest conversations with AMD about foundry services and discussions with Apple about a possible investment.
The company approached TSMC to discuss potential investments or partnerships according to recent reports. Details of these conversations remain limited.
Intel’s stock performance has been volatile throughout 2025. The recent surge marks a sharp reversal from earlier weakness in the year.
SoftBank completed its $2 billion private placement of Intel shares through a Securities Purchase Agreement. The transaction closed as previously announced by both companies.
