LDR
- Intel (INTC) earned “Neutral” upgrade from Citi analyst Atif Malik with $50 price target following TSMC’s strong quarterly results.
- TSMC’s advanced packaging capacity limitations position Intel to attract foundry clients seeking alternative manufacturing partners.
- Shares rallied 139% over 52 weeks and 107% in six months, peaking at $50.39 before recent 6% pullback.
- Third-quarter revenue hit $13.65 billion, exceeding forecasts, with earnings flipping to $0.23 profit from prior-year $0.46 loss.
- Consensus rating stays at “Hold” with $39.62 mean target, while KeyBanc’s bullish $60 forecast indicates 28% upside potential.
Wall Street’s view of Intel shifted this week after Citi dropped its “Sell” rating on the chip maker. The upgrade came as Taiwan Semiconductor reported record profits, revealing production constraints that could benefit Intel’s foundry ambitions.
Analyst Atif Malik moved Intel to “Neutral” from “Sell” and assigned a $50 price target. His thesis centers on TSMC’s limited advanced packaging capacity. This shortage hands Intel a “unique window of opportunity” to secure foundry customers previously locked into TSMC contracts.
Federal government support sweetens the deal. The Trump administration’s $8.9 billion investment in Intel creates financial incentives for companies to shift chip production stateside.
The stock delivered triple-digit returns over the past year. Shares jumped 139% in 52 weeks and 107% across six months. Intel touched $50.39 on January 15, marking a 52-week peak, though the stock has since dipped 6%.
CEO Lip-Bu Tan orchestrated the reversal through business restructuring and expense management. His strategy prioritized AI chip development while pursuing strategic alliances. Nvidia purchased a $5 billion equity position tied to collaborative work on data center and PC products. SoftBank contributed an additional $2 billion investment.
Manufacturing Business Gains Ground
Malik identifies three catalysts for foundry growth. TSMC’s packaging bottleneck creates immediate demand. Government funding encourages domestic production. AI chip designers require backup options when TSMC runs out of capacity.
Intel’s 18A process technology reached production status. Panther Lake processors built on this platform started appearing in laptops this month. Industry analysts at KeyBanc estimate 18A manufacturing yields achieved 60% efficiency, with ongoing improvements matching standard industry progression.
This validates Intel’s manufacturing capabilities for potential customers. Designers needing production capacity now have a proven alternative to TSMC. The AI accelerator market presents the largest revenue opportunity. Tech giants including Alphabet, Amazon, and Microsoft develop custom AI silicon. Growing AI deployment will generate demand for inference processing power, potentially directing orders toward Intel’s foundries.
Intel’s third-quarter performance showed recovery momentum building. Revenue grew 3% year-over-year to $13.65 billion, surpassing the $13.14 billion analyst estimate. Non-GAAP gross profit soared 128% to $5.46 billion. Per-share earnings reversed from a $0.46 deficit to a $0.23 gain.
Processor Unit Faces Headwinds
CPU segment concerns prevented Malik from issuing a “Buy” recommendation. Panther Lake drew attention at CES but skips desktop computers. Arrow Lake covers desktop markets until Nova Lake launches, likely in late 2026. Arrow Lake underperforms in gaming applications, and the coming refresh won’t solve fundamental performance gaps.
AMD steadily captures processor market share in consumer and server categories. Qualcomm entered the PC space with Arm-based chips, although software compatibility challenges limit traction. Memory pricing adds complexity. Data center AI applications consume large memory volumes, pushing manufacturers to prioritize HBM production. Elevated memory costs could dampen PC purchasing, complicating Intel’s turnaround timeline.
Recent analyst activity reflects mixed sentiment. RBC Capital launched coverage with “Sector Perform” and a $50 target, highlighting strong PC and server fundamentals. UBS increased its target from $40 to $49 while keeping a “Neutral” stance. KeyBanc moved to “Overweight” with a Street-leading $60 target, praising manufacturing execution in AI products. Melius Research shifted to “Buy” at $50, suggesting Apple and Nvidia may tap Intel’s 14A technology for 2028-2029 chip production.
Fourth-quarter fiscal 2025 projections show a $0.02 loss per share. Full-year 2025 loss should shrink 84% to $0.14, followed by fiscal 2026 profit of $0.17 per share.
Current analyst breakdown includes four “Strong Buy” ratings, one “Moderate Buy,” 33 “Hold,” one “Moderate Sell,” and four “Strong Sell” among 43 firms covering the stock. The $39.62 consensus target implies 16% downside from current prices. Intel’s price-to-sales ratio of 3.9 times exceeds the sector’s 3.5 times average. Market capitalization stands at $224 billion.
