Key Highlights
- Intel shares declined 2.6% on Wednesday following unexpectedly high wholesale inflation figures that unsettled semiconductor stocks
- The Producer Price Index for April increased 1.4% month-over-month, marking the steepest 12-month climb since December 2022 and diminishing expectations for interest rate reductions
- Bank of America increased Intel’s price target from $56 to $96 while maintaining an underperform (sell) recommendation
- A preliminary agreement between Intel and Apple was reached for Intel to serve as a chip manufacturer for Apple products
- Bank of America analysts project the Apple partnership could unlock a $35–$40 billion market opportunity, though significant production volumes may not materialize until 2028 or beyond
Intel (INTC) shares experienced a 2.6% decline during early Wednesday trading sessions as elevated inflation figures disrupted a multi-month rally that had been gaining strength across the chip sector.
The Producer Price Index for April registered a 1.4% month-over-month increase — representing the most significant 12-month wholesale inflation acceleration since December 2022. This development triggered anxiety among investors throughout the semiconductor industry.
Advanced Micro Devices (AMD) experienced a 3.1% decline. Qualcomm (QCOM) fell 1.3%, following an 11% plunge the previous day. All three companies had shown positive momentum in premarket trading before the inflation data was released.
The investor anxiety is clear: elevated PPI figures influence the Federal Reserve’s preferred inflation gauge, the PCE index. Persistent inflation translates to reduced probability of rate cuts, potentially cooling AI infrastructure investment — and semiconductor demand alongside it.
Intel’s stock performance has been extraordinary. Shares closed at $129.44 on May 11, representing a 93.8% surge since April 23, when the chipmaker announced first-quarter earnings that exceeded analyst projections. As a comparison, the S&P 500 (SPY) advanced approximately 4.3% during the identical timeframe.
That earnings success came with caveats, however. Intel disclosed a net loss of $4.3 billion for Q1. The foundry division recorded a $2.4 billion loss in Q1 2026, virtually matching the $2.3 billion deficit from Q1 2025.
BofA Increases Price Projection While Retaining Sell Recommendation
Bank of America analyst Vivek Arya elevated Intel’s price projection to $96 from $56 after reports emerged of a preliminary partnership between Intel and Apple for Intel to produce chips destined for Apple products.
Notwithstanding the price target increase, Arya maintained an underperform (sell) stance on the stock. The primary rationale: even if a formal agreement is finalized immediately, it would likely necessitate an additional two to three years for capital expenditure deployment, qualification processes, and production scaling. Substantial production volumes may not commence until 2028 or later.
BofA projects the Apple collaboration represents a $35–$40 billion or greater addressable revenue opportunity, with Intel potentially securing approximately 25% — translating to $10 billion-plus annually over time. However, analysts indicated they haven’t incorporated any of these projections into their current financial models.
They also noted that scaling foundry capacity for Apple would initially pressure gross margins, potentially delaying Intel’s foundry operating margin breakeven objective — presently targeted for 2027 — by an additional one to two years.
Catalysts Behind the Stock Surge
Beyond the Apple development, several additional factors have propelled INTC’s recent performance. Intel bought back Apollo’s equity position in the joint venture associated with its Fab 34 facility in Ireland. The company also revealed intentions to participate in Elon Musk’s Terafab initiative and secured a multi-year agreement with Google to construct AI and cloud infrastructure.
The most significant risk confronting Intel’s foundry strategy remains manufacturing yield performance. Its cutting-edge 18A node hasn’t yet achieved yields that rival TSMC or Samsung, and Intel management provided encouraging statements but no concrete metrics during the earnings call.
BofA’s identified downside scenarios include slower-than-projected 18A production ramps, absence of significant external foundry clients, and ongoing market share erosion in the PC processor segment.
Intel stock stood at $129.44 as of the May 11 close, exceeding BofA’s revised $96 price target by more than 34%.
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