Baird Lowers Intel Price Target to $83

Baird analyst Tristan Gerra lowered the price target on Intel (NASDAQ: INTC) to $83 (from $125) while maintaining a Neutral rating.

“Lower-than-expected fungibility between client revenue plunging YoY in 4Q and server revenue surging but supply-constrained not just due to wafers but also substrates (with relief coming in 2H27), hitting both revenue and gross margin.

Client easy comps will not materialize until 2H27, while we continue to model share loss in both segments in 2027. FCF is expected to be negative in 2027.

Neutral-rated Client Computing 4Q revenue outlook embeds a 20%+ YoY decline, a comp which does not get easier on a YoY basis until 2H27 in our view.

We are modeling a resumption of YoY growth in 2H28 on improved DRAM availability, followed by a strong 2029. 18A now represents nearly one-third of client CPU revenue.

Conversely, 4Q guidance embeds about 60% YoY growth for data center revenue in 2026 ($10B higher than Intel’s expectations entering the year), and we model another 50%+ growth for 2028.

We continue to model low 30% unit growth for Intel server CPU in 2027 (in line with Intel’s guidance) with 15%+ price increase (no guidance), with AMD modeled to gain market share in 2027.

Intel sees a $200B+ CPU TAM by 2031, a 5x increase from current $40B TAM levels.

For 4Q, Intel guided for DCAI revenue to increase around 15% QoQ, which infers that without the Fab 28 incident QoQ growth would near 20%.

Intel expects to be competitive in server CPUs with Coral Rapids (Xeon 8, 2028 ramp), and ahead of AMD on the follow up-gen product.

This suggests ongoing share loss in servers at least throughout 2027.

Advanced packaging substrate and wafer ouput constraints continue to impact supply (Intel 3: Fab 24 in Leixlip, Ireland and D1X Fab in Hillsboro, Oregon – Sierra Forest and Granite Rapids), along with a temporary shutdown of Intel’s Fab 28 (Intel 7/10nm) in Intel’s Kiryat Gat, Israel following an adverse event and notably affecting higher-margin Sapphire Rapids production ($300M mostly server-related revenue in 4Q and likely similar in 1Q, 200BP gross margin impact in 4Q).

On a positive note, both Intel 3 and 18A (Oregon; Fab 52 and 62 in Arizona) process yields are improving with wafer output ahead of expectations in the quarter.

18A-P (Wildcat Lake, Panther Lake, Nova Lake, datacenter/AI accelerator applications, foundry) is on track to launch across products by year-end.

Granite Rapids (Intel 3) is now the highest-volume server CPU product.

Management does not expect positive FCF in 2027 given a steep increase in capex spend, and targets Intel 3 to turn profitable in 2027.

Please refer to the next page for a discussion on capex, edge AI, stock derivatives, quarter results and guidance. Reiterating Neutral rating. New price target is $83.”

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