Intel’s (NASDAQ:INTC) latest quarterly results and guidance are an indication that its turnaround effort is working, but the semiconductor giant still has a long way to go, Wall Street analysts said.
Shares rose 7% in premarket trading, while competitors AMD (AMD) and Nvidia (NVDA) also saw gains.
“After adjusting for the moving parts, results and guidance came in a bit better given accelerating demand in servers and early stages of a PC refresh cycle,” Jefferies analyst Blayne Curtis wrote in a note to clients. “Foundry continues to face challenges, but at minimum 18A is up and running, and we look forward to hopefully seeing Panther Lake SKUs at CES. Altogether solid results but more a function of the stronger end-markets.” Curtis has a Hold rating on Intel, but raised his price target to $40 from $35.
Seeking Alpha analyst Louis Gerard said it was a great quarter that bodes well for Intel’s future.
“I’m particularly happy with the company’s Client Computing Group, that has grown by around 5% [year-over-year] and continues to be the current engine of the company, as it allows Intel to fund its other higher growth ventures,” Gerard said via email.
Morgan Stanley analyst Joseph Moore said the upside seen in the third-quarter was a result of conservatism, led by Intel CEO Lip Bu-Tan. However, he added he was “surprised” the data center market was supply constrained, but showed minimal year-over-year growth.
“All quarter long, we have been writing about the fact that server CPUs are basically in full allocation, from both Intel and AMD,” Moore wrote. “We have mostly attributed that to demand. But looking at Intel’s DCAI [numbers, which were up mid-single digits ]sequentially, up slightly y/y, and indicating subseasonal growth due to supply constraints for another couple of quarters from this level — suggests that Intel simply underbuilt. Some of it is a rebalancing of the portfolio as well, and other challenges, but we would have expected with over $20 [billion] of gross capex in the last 12 months that the company could fund double-digit growth.”
Despite the optimism, Moore kept his Equal-Weight rating on Intel and said he is not ready to change his mind, even as the stock has moved higher in recent weeks.
“To the extent that the rally is driven by foundry/geopolitical enthusiasm, and our view is that we will see process technology benefits show up first in the microprocessor portfolio, there is risk that the foundry/geopolitical enthusiasm will yet again fade,” Moore added. “We aren’t calling for that — we are staying EW — because there will probably be intermediate positive proof points. We certainly could see foundry agreements with key customers, even if they are nominal commitments prompted by the government, that could continue to be a positive catalyst. But we remain skeptical that there is a positive DCF foundry opportunity.”
Bank of America analyst Vivek Arya said the results and guidance were strong and served as a positive read through for AMD, especially as demand is likely to exceed supply into 2026.
However, Arya said he does not expect a “material improvement” in the company’s foundry business, and the lack of an AI accelerator is a major negative.
“The stock at 50x+ CY27 PE is overvalued in our view and reflects speculative assumptions around regaining CPU share gain and/or emergence of some meaningful foundry wins,” Arya wrote. “Expressed differently, if INTC were to trade inline with SOX index at 22x CY27 PE, the company would need to generate $1.60-$1.80+ in [pro-forma earnings per share], over 2x our forecast.”