Intel in spotlight as Wall Street weighs in foundry, AWS, construction updates

Intel (NASDAQ:INTC) was in focus on Tuesday as Wall Street firms weighed in on several key announcements that the semiconductor giant made regarding its business, including an update on its foundry plans.

Shares rose 6.5% in premarket trading.

KeyBanc Capital Markets analyst John Vinh said the announcements — including the decision to pause construction on plants in Germany and Poland — were mostly about cost-cutting, rather than returning to growth. Nonetheless, he was “very encouraged” by the updates, as he believes it shows Intel’s management is being proactive about the inputs it can control, largely cost.

Intel’s decision to make its foundry business a separate independent subsidiary was also seen in a positive light, as it should reduce conflicts of interest between foundry and design, Vinh, who maintained his Sector Weight rating on Intel, added.

Evercore analyst Mark Lipacis had a similar take to KeyBanc’s Vinh, in that the updates were positive, but not enough for him to change his mind on the trajectory of the Pat Gelsinger-led company.

“We view the developments as incremental positives, but remain In-Line rated until there is increased visibility into [the] success of its foundry business,” Lipacis wrote.

More questions remain

While Intel said it would manufacture chips for Amazon (AMZN) Web Services, Bank of America analyst Vivek Arya said the announcement may not be as impressive as it sounds initially.

“AWS win sounds impressive but [Intel] has already been supplying AWS with CPU for a long time, so customization isn’t exactly something new, while the AI fabric (networking) win on 18A will probably matter only from CY26 while competing against tough Ethernet switch incumbency from [Broadcom] (AVGO) and others,” Arya wrote in a note to clients. He maintained his Underperform rating and $21 price target on Intel.

The bull case for Intel is that it will be able to close the manufacturing gap between it and Taiwan Semiconductor (TSM) and deliver a customer experience that enables companies like Apple (AAPL), AMD (AMD), Nvidia (NVDA) to easily choose it over the competition. However, that is likely to “take a long time to realize,” Evercore’s Lipacis added.