Intel (INTC) was in focus on Tuesday as investment firm HSBC upgraded the semiconductor giant ahead of its fourth-quarter results release, set for Jan. 22.
Shares were little changed in premarket trading.
“We had been cautious on Intel mainly given overall uncertainty on customer pipeline and execution headwinds in their foundry business while the core business was also lacking visibility on growth drivers,” HSBC analyst Frank Lee wrote in a note to clients. “However, we now turn more positive as we expect the traditional servers (DCAI) to get back on a growth trajectory. We expect there is an overwhelmingly increasing demand for server CPUs driven by rising agentic AI. We expect FY26e server shipments to grow 15%-20% y-o-y (vs street estimates of 4-6%). While the stock has moved up 19% YTD (vs. S&P 500 up 1%), we believe there is further [Data Center and AI Group] upside still not fully priced in. Hence, we upgrade Intel from Reduce to Hold.”
Lee, who also raised his price target on Intel to $50 from $26, added that the growth in the server market is still “underestimated” by Wall Street, which is notable considering where he believes artificial intelligence is headed.
“We believe that the rise of agentic AI is a significant catalyst for server CPU demand,” Lee explained. “As AI moves from simple assistants to autonomous agents that plan and execute tasks, the requirement for general-purpose compute is accelerating. As a result, we expect that the market demand for server CPUs in 2026e implies a growth of 30%- 40% [year-over-year].”
The analyst also touched on Intel’s foundry business, which he said has shown improved engagement.
“We have been cautious on Intel’s foundry business driven by execution issues and lack of visibility on its external customer pipeline,” Lee added. “However, we now acknowledge that its engagement with external customers is increasing. We continue to expect Nvidia (NVDA) to use TSMC for its AI datacenter GPUs with a possibility that it may use Intel for smaller [total addressable market] gaming GPUs. We also believe that Apple (AAPL) is in discussion with Intel for its M-series processors.”
Separately, on Tuesday, Susquehanna raised its price target on Intel to $45 from $40.
A consensus of analysts expect Intel to earn $0.08 per share on $13.38B in revenue for the coming quarter.