JPMorgan Raises Intel Price Target to $35
JPMorgan analyst Harlan Sur raised the price target on Intel (NASDAQ: INTC) to $35.00 (from $30.00) while maintaining an Underweight rating.
“Results were stronger than expected, but guidance landed well short of expectations – both primarily a function of burgeoning server CPU demand, offset to varying degrees by Intel’s inability to fully service this demand due to a lack of available internal wafer capacity.
Wafer supply should begin to improve in Q2 as Intel transitions CCG wafers to DCAI and continues to drive yield improvements, but this will still likely prove insufficient given the level of demand for traditional server CPU compute that is materializing on the back of rapidly rising volumes of AI inference workloads (traditional CPU compute is increasingly being leveraged for a variety of tasks/processes incl. workload orchestration, pre-/post-processing, data retrieval etc.).
Intel will also no longer be able to lean on inventory drawdown as a means to support revenue growth in Q1, exacerbating the impact of the capacity shortage.
Looking beyond near-term supply-demand dynamics though, Intel is addressing the shifting demand landscape by streamlining its server CPU roadmap, focusing on high-end Diamond Rapids and Coral Rapids SKUs, and pushing to accelerate go-to-market timing as it looks to stem share loss to AMD (and potentially recapture share at key hyperscale and enterprise customers).
The outlook for Client/CCG is less “rosy” though, with memory/storage supply constraints and elevated pricing likely to crimp growth for the PC market this year (as we highlighted in our 4Q preview, our global team is now forecasting a 9% decline in PC shipments in 2026).
On net, we still think there is enough of a demand tailwind in DCAI to more than offset a decline in CCG this year, driving LSD-MSD % Y/Y overall growth for INTC.
Gross margin should improve incrementally through 2026 as volumes ramp, 18A yields improve, and higher pricing in server CPU begins to take effect, though we still anticipate GM exiting 2026 barely at the 40% level.
In Foundry, we acknowledge that the prospects for Intel’s business across advanced packaging, 14A and even 18A-P (which seems to be gaining traction with external customers) are steadily improving, but the timing of any material external customer ramps would still be multiple years down the road, at the earliest, and we see no certainty that customers would be willing to commit large volumes initially, meaning Foundry economics/scale will likely remain challenged at least through the end of the decade.
In sum, we still view Intel as being at risk of further share loss in its product businesses (particularly in server CPU given AMD’s strong product portfolio/roadmap and Intel’s supply constraints), with a largely unproven external Foundry business that (so far) has seen very limited traction with customers.
We cut our forward estimates and marginally increase our PT to $35 based on a group multiple range of 25-30x on $1.16 of earnings power exiting 2026. We maintain our UW rating.”
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