Intel Corporation's stock experienced a notable uptick on Monday, climbing approximately 6.5% to $124.57, following a significant upgrade from Bank of America. The financial institution elevated its rating on the chipmaker from Underperform to Buy, a rare double upgrade, and raised its price target to $135 from $96. This move reflects growing confidence in Intel's CPU business and its foundry operations, which are central to the company's turnaround strategy.
The upgrade comes as Intel's market capitalization hovers around $633 billion. Bank of America analyst Vivek Arya cited increased conviction in Intel's ability to address industry constraints in leading-edge wafers and packaging, as well as its potential to supply a much larger agentic CPU total addressable market (TAM). The TAM represents the potential sales opportunity if demand materializes fully.
Foundry Business in the Spotlight
Investors are closely watching Intel's foundry business, which aims to manufacture chips for external clients. In the first quarter, Intel Foundry reported $5.4 billion in revenue, a 16% year-over-year increase, but also recorded an operating loss of $2.44 billion. The division remains unprofitable, and market participants are eager to see progress in reducing these losses. The foundry's success is seen as a key pillar of Intel's long-term growth, especially as it seeks to compete with industry leader TSMC.
Recent reports have added to the narrative around Intel's foundry ambitions. According to The Information, Alphabet's Google has ordered over three million AI chips (TPUs) for 2028, though Intel was not mentioned as a supplier in that specific order. Separately, Nvidia has reportedly evaluated Intel's technology but has not yet placed an order. Intel declined to comment on these reports, which Reuters said it could not independently confirm.
Earnings Expectations and AI Demand
The next major catalyst for Intel is its second-quarter earnings report, scheduled for July 23. Wall Street expects earnings per share (EPS) of $0.19 on revenue of $14.40 billion, in line with the company's guidance. Investors will focus on margins, particularly in the context of AI-server chip demand and the trajectory of foundry losses. The first quarter saw Intel's Data Center and AI revenue rise 22% to $5.1 billion, contributing to total revenue of $13.6 billion, up 7% year-over-year.
Bulls point to signs that AI data center demand is starting to shift beyond GPUs, potentially benefiting Intel's CPU and custom chip offerings. However, the company's trailing EPS remains negative, and its stock trades above the average analyst target of $75.58, according to Benzinga. The average rating among 36 analysts is Neutral, reflecting lingering concerns about valuation and execution.
Market Context and Risks
Intel's stock has been buoyed by AI optimism and shifting market sentiment about the company's recovery. Monday's broader market also saw gains, with Nasdaq 100 futures rising 2.1% ahead of the open, partly driven by a U.S.-Iran agreement that boosted risk appetite. However, Intel shares remain risky, as the stock already prices in much of the optimism around AI infrastructure, U.S. chip manufacturing, and potential foundry wins.
Key risks include ongoing foundry losses, high execution risk at the 18A and 14A process nodes, and the need for concrete orders from major tech firms. The upcoming earnings report will be critical in determining whether Intel's strategic bets are translating into financial gains. For now, the stock's valuation leaves little room for error, and any disappointment could trigger a sharp reversal.
