Key Takeaways
- Morgan Stanley increased Intel’s price objective to $56 from $41, reflecting improved server market conditions
- The firm maintained an Equal-weight stance on Intel amid worries about its upcoming chip technology pipeline
- Micron and Sandisk emerged as Morgan Stanley’s top selections for capitalizing on AI-powered CPU growth
- Sandisk became a Nasdaq 100 member but experienced a 1.6% premarket decline following the previous week’s 12% climb
- Wells Fargo increased Sandisk’s price objective to $975 from $675 while maintaining an Equal Weight stance
Morgan Stanley boosted its valuation forecast for Intel recently, though the firm refrained from issuing a buy recommendation. The financial institution elevated the target to $56 from $41, supported by robust server market dynamics and enhanced profit projections for 2026 and 2027.
The research team headed by Joseph Moore adjusted their 2027 profit forecast for Intel upward from $0.97 to $1.34 per share. Morgan Stanley’s current projections exceed the broader Wall Street consensus for Intel’s earnings in both periods by approximately 20%.
The firm anticipates Intel’s data center division will experience roughly 30% annual growth in 2026, achieving $21.8 billion in sales.
Nonetheless, Morgan Stanley maintained its Equal-weight classification for Intel. The primary issue centers on Intel’s technology development timeline. Performance limitations in its upcoming Diamond Rapids server processor have been acknowledged by Intel’s leadership, according to the analysts.
By contrast, competitor AMD’s Venice chip was characterized as “a clear major step forward.” Morgan Stanley also assigns an Equal-weight rating to AMD with a $255 valuation target.
The research team believes AMD stands to gain more substantially from server market expansion due to its technological edge. However, they observed that AMD’s share price responds more significantly to GPU developments than CPU advances.
Memory Chip Manufacturers Lead Morgan Stanley’s Recommendations
Morgan Stanley identified Micron and Sandisk as its top investment choices for AI-fueled CPU expansion. Both companies carry Overweight ratings.
“Our favorite way to play CPU strength is through memory stocks,” the analysts wrote. They pointed to tight data center supply conditions expected to last at least through 2027, plus long-term supply deals forming with major cloud providers.
The firm expressed doubt regarding Intel’s manufacturing operations, describing a favorable result as “remote.”
Sandisk Enters the Nasdaq 100 Index
Coinciding with Morgan Stanley’s analysis release, Sandisk officially secured its position in the Nasdaq 100. However, shares dropped 1.6% to $906.48 during premarket hours.
The decline came after a 12% jump the prior Monday when Nasdaq initially revealed the addition. This “buy the rumor, sell the news” dynamic frequently accompanies index membership announcements.
Wider market weakness contributed to the retreat. S&P 500 futures declined 0.4% following escalating U.S.-Iran tensions over the weekend that triggered concerns about a potentially compromised ceasefire agreement.
Atlassian is exiting the Nasdaq 100 to accommodate Sandisk’s entry. Its shares declined 1.4% in premarket trading as index funds adjusted their portfolios.
Wells Fargo analyst Aaron Rakers elevated his valuation target for Sandisk to $975 from $675 the same day, while retaining an Equal Weight classification. The firm boosted its 2026 EPS projection and established its 2027 EPS forecast at $150.
Wells Fargo acknowledged it had “clearly missed” Sandisk’s run. The stock is up roughly 2,990% over the past year, fueled by surging demand for memory products in data centers.
The firm observed that consensus valuations hover around 6 to 7 times price-to-earnings on maximum EPS, which it views as limiting additional appreciation potential currently.
Wells Fargo’s updated $975 target exceeds the present premarket value, but its Equal Weight designation indicates the firm isn’t actively recommending aggressive buying.
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