Bank of America upgraded Intel Corp. to Buy from Underperform with a $135 price target, sending shares up more than 5% in pre-market trading. The upgrade reflects confidence in Intel's foundry business momentum and its improving financial trajectory after a Q1 double beat.
Bank of America upgraded Intel Corp. to Buy from Underperform, setting a $135 price target that implies upside from current levels.
"The foundry business is gaining real traction, and the Q1 results show Intel can execute on its turnaround," the Bank of America analyst said, citing the company's improving financial trajectory and growing customer pipeline.
The upgrade breaks from the Wall Street consensus. Of 44 analysts covering Intel, 31 rate it Hold, with only nine at Strong Buy, according to data compiled by Bloomberg. The mean price target of $90.58 sits below BofA's new $135 target, while the high estimate reaches $150. The previous rating of Underperform placed BofA among the bearish minority, alongside two analysts with Strong Sell ratings.
Intel shares rose more than 5% in pre-market trading following the announcement. The stock has surged 192% year-to-date but remains about 16% below its 52-week high reached on May 11, after a broader semiconductor selloff weighed on the sector. The stock has gained 427% over the past 12 months, making it one of the best performers in the Philadelphia Semiconductor Index.
Intel's foundry business generated $5.4 billion in revenue in the first quarter, up 16% year over year, accounting for 40% of the company's total $13.6 billion in revenue. The Data Center and Artificial Intelligence segment expanded 22% to $5.1 billion, while the Client Computing Group posted a modest 1% gain to $7.7 billion. Earnings per share more than doubled to $0.29, beating consensus estimates and extending Intel's streak of consecutive earnings beats to three quarters.
The upgrade comes as Intel's foundry unit gains momentum with potential marquee customers. Google has placed an order to manufacture more than three million of its Tensor Processing Units through Intel's foundry for delivery in 2028, according to a report from The Information. Nvidia is also evaluating Intel's 18A process node for a multi-chip platform, though no order has been placed. Tesla has already signed on as a foundry customer for its Terafab project, and Apple has reportedly held talks with Intel about chip manufacturing.
The stock trades at 156.6 times forward earnings, a premium that the BofA analyst argues is justified by accelerating foundry revenue and potential design wins. For the second quarter, Intel management projected revenue between $13.8 billion and $14.8 billion, with non-GAAP earnings per share of $0.20, roughly in line with the Wall Street consensus of $14.4 billion and $0.21. The company ended the first quarter with $17.7 billion in cash, well above its short-term debt of about $2 billion.
This article is for informational purposes only and does not constitute investment advice.
