Investment firm Citi upgraded Intel (INTC) and removed Micron (MU) from its U.S. Focus List on Thursday.
Intel
Intel was raised to Neutral from Sell and put a $50 price target, as the firm believes it should benefit from advanced packaging tightness at Taiwan Semiconductor (TSM). In addition, it has a “unique window of opportunity to attract foundry wafer customers with the support of the US government,” analyst Atif Malik said.
“We believe Intel will get AI ASIC spillover demand e.g. TPUs in the back end first and then front-end foundry customers as process yields on 18A-P/14A improve,” Malik added.
Despite the aforementioned positives — as well as the U.S. government being an investor and the prospects of “stabilizing” capex — Intel is not completely out of the woods, Malik added. It is also expected to lose CPU market share to AMD (AMD) and Arm (ARM), and there is the chance that the PC market softens, giving rising memory prices, the analyst posited.
Micron
Micron was removed from the U.S. Focus List, as Malik said the pricing momentum for dynamic random access memory likely “decelerates” in the second-quarter from the first quarter.
“Micron stock typically follows the [quarter-over-quarter] pricing momentum,” Malik explained. “That said, we expect extended memory [supply-demand] balance through 2026/27 on limited fab space availability and strong AI demand.”