Key Takeaways
- Morgan Stanley increased Intel’s price objective to $56 from $41, pointing to improved server market demand
- The firm maintained an Equal-weight stance on Intel stock despite the target increase, expressing reservations about upcoming chip technology
- Memory manufacturers Micron and Sandisk are Morgan Stanley’s top recommendations for capitalizing on AI-fueled CPU growth
- Sandisk became a Nasdaq 100 component but declined 1.6% in early trading following a previous week’s 12% gain
- Wells Fargo increased Sandisk’s price objective to $975 from $675 while maintaining an Equal Weight stance
Morgan Stanley increased its price objective for Intel shares this week, though it refrained from issuing a buy recommendation. The financial institution elevated the target from $41 to $56, propelled by robust server market conditions and improved profit projections for 2026 and 2027.
The research team headed by Joseph Moore revised their 2027 profit forecast for Intel upward from $0.97 to $1.34 per share. Morgan Stanley’s current estimates stand approximately 20% higher than the consensus Wall Street projections for Intel’s earnings in both years.
The bank forecasts Intel’s data center division will expand at roughly 30% annually in 2026, generating $21.8 billion in sales.
However, Morgan Stanley maintained its Equal-weight assessment of Intel shares. The primary worry centers on Intel’s product development timeline. Issues with its upcoming Diamond Rapids server processor have been acknowledged by Intel’s chief executive, according to the analysts.
In 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 price objective.
The research team believes AMD stands to gain more from server market strength given its product advantages. However, they observed that AMD’s stock price responds more significantly to GPU developments than CPU advances.
Memory Chip Manufacturers Top Morgan Stanley’s Recommendations
Morgan Stanley identified Micron and Sandisk as its preferred investment options for capturing AI-driven CPU demand growth. 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 bank expressed doubt regarding Intel’s foundry operations, describing a favorable result as “remote.”
Sandisk Enters the Nasdaq 100 Index
Concurrently with Morgan Stanley’s research publication, Sandisk formally became a Nasdaq 100 constituent. Yet the shares dropped 1.6% to $906.48 during premarket hours.
The decline came after a 12% jump the preceding Monday when Nasdaq initially revealed the inclusion. This “buy the rumor, sell the news” dynamic frequently occurs with index membership changes.
Wider market weakness contributed to the retreat. S&P 500 futures declined 0.4% following heightened U.S.-Iran tensions during the weekend that sparked concerns about ceasefire stability.
Atlassian is exiting the Nasdaq 100 to accommodate Sandisk’s entry. Its shares fell 1.4% in premarket trading as index funds adjusted their holdings.
Wells Fargo analyst Aaron Rakers lifted his Sandisk price objective to $975 from $675 the same day, while keeping an Equal Weight rating. The firm raised its 2026 earnings per share forecast and established its 2027 EPS projection 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 valuation hovers around 6 to 7 times price-to-earnings on peak EPS, which it views as limiting additional upside potential currently.
Wells Fargo’s updated $975 target exceeds the present premarket price, though its Equal Weight rating indicates it’s not actively recommending investors purchase the stock.
