Melius Research Reiterates Buy on Intel, $165 PT

Melius analyst Ben Reitzes reiterated a Buy rating and $165 price target on Intel (NASDAQ: INTC).

“Lip-Bu Still Can: Intel is up roughly 163% this year to $97.14, still ahead of AMD’s ~130% and the SMH’s ~50%, but we don’t think it’s done.

We think it’s time to revisit the story and our $165 target.

Rather than trimming it after Intel sold $20B of stock at $95 (~3.5% dilution) to fund its foundry ambitions, we could make an argument that even $200 over 2 years is on the table.

Remember, Intel has a Foundry that includes critical IP, engineers, facilities, tooling, packaging, and wafer fabrication that is all critical to US national security, while also addressing one of the greatest shortages of all time.

If I were running the country, I’d make sure this “foundry” was not only healthy, but it was thriving and ready to step up given current concentration of AI chip production in Taiwan.

You can’t rely on TSMC alone to make advanced chips here – even if TSMC is investing more and more.

To that end, we think this asset can eventually get spun out (around 2030) since a US Foundry National Champion with no conflicts of interest (like its captive Product business) is imperative to national security.

While a sum of the parts (SOTP) valuation analysis doesn’t make sense for many tech companies (ahem, GOOGL, AAPL), we think it makes sense for Intel.

Bottom Line: The AI “puck” has skated toward Intel’s foundry asset, in addition to CPUs in general.

Sure, it has competitors that are arguably ahead of it in chip making and products (like TSM and AMD), but we see 2 distinct assets here that each could be worth well over $80.

While pricing power and ongoing operational improvements should help it beat numbers near-term, we see long-term progress with the foundry under the leadership of Lip-Bu Tan driving a multi-year call here.

We reiterate our Buy rating and 2-year target of $165, which places a 15-20% discount to a $200 SOTP valuation.

Many Allies Have Invested in Intel’s Success, Beyond Trump: In August, Intel priced an offering of 210.5mm shares at $95, for net proceeds of close to $20B (upsized from $15B).

While the press release did not say “14A”, Intel has to have high conviction in volume for that node and upside to its core Product business, saying that 2027 capex would run “significantly above” 2026’s >$20B.

Lip-Bu Tan would not upsize a deal to fund a node he isn’t sure he will build and the strategic shareholders tell the same story.

The US government bought 433mm Intel shares at $20.47 in August 2025, roughly 9.9%, now worth about $45B.

Then Nvidia bought $5B at $23.28 in September 2025, closed in December, and that stake is worth north of $20B – and that was after SoftBank put in $2B at $23 a month earlier.

On June 18 the President slipped out that Intel bagged an Apple manufacturing agreement (to be clear, neither company has confirmed this) that came two days after Intel had disclosed that 18A-P (the performance-enhanced variant of 18A) had entered risk production.

Tesla is the only publicly confirmed 14A customer for the AI chips in its Austin “TeraFab” joint project with SpaceX.

A fear that Trump could sell all or part of the Federal Government’s stake has been weighing on the stock lately, but we don’t see a scenario where the US Government is heavily involved in seeing that Intel’s Foundry isn’t a thriving success.”

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