<\/p>\n
Intel (INTC) stock closed the May 11 trading session at $129.44. That means it has gained 93.8% since April 23, according to Yahoo Finance. Meanwhile, the SPDR S&P 500 index (SPY) is up about 4.3% in the same period.<\/p>\n
Why is Intel outpacing the S&P 500 so much, and why that specific period? The company reported Q1 earnings on April 23 and beat expectations, leading the stock to surpass its dot-com bubble record price.<\/p>\n
The expectations weren\u2019t high, and fundamental problems with the business persist. The AI boom-driven sentiment is based on hypotheticals, not on strong, profitable business at the moment, as evidenced by the reported net loss of $4.3 billion.<\/p>\n
A string of other good news has contributed to the INTC stock rally:Intel repurchased Apollo\u2019s (APO) equity interest in the joint venture related to Intel\u2019s Fab 34 in Ireland.The company said it will join Elon Musk\u2019s Terafab project.It has a multiyear partnership with Google to build out AI and cloud
infrastructure.
\nSource: TheStreet<\/p>\n
Intel has added another piece of good news to the chain, boosting the stock even further.<\/p>\n
Bank of America raised its Intel stock price target.<\/p>\n
Shutterstock<\/p>\n
Intel signs preliminary agreement with Apple<\/p>\n
On May 8, the Wall Street Journal reported that, according to its sources, Intel and Apple (AAPL) had achieved a preliminary agreement for Intel to make some of the chips that power Apple devices.<\/p>\n
To understand the importance of this potential deal, we need to take a closer look at Intel\u2019s business. The main business is Integrated Device Manufacturer (IDM), but another part of Intel\u2019s business is its foundry business. This entails Intel\u2019s fabs manufacturing chips for third parties, such as Apple, that are not designed by Intel itself.<\/p>\n
More Tech Stocks:<\/p>\n
BofA resets Google stock price target after earnings smasherBank of America resets Microsoft stock forecast after earningsGoldman Sachs resets Nvidia stock forecast ahead of earnings<\/p>\n
Intel\u2019s biggest problem is that fabs are extremely expensive to run, and it doesn\u2019t have enough third-party customers. According to FORM 10-Q, Intel\u2019s Foundry business lost $2.4 billion in Q1 2026, and it lost $2.3 billion in Q1 2025.<\/p>\n
Getting customers for fabs is very difficult, as its advanced manufacturing process (node) 18A doesn\u2019t yet have good yields. Intel\u2019s executives offered reassuring words but no exact numbers on manufacturing yields during the earnings call.<\/p>\n
As long as the company doesn\u2019t hit yields good enough to be at least on par with Taiwan Semiconductor Manufacturing Company or Samsung, any potential deals it is making for 18A need to be seen as on thin ice.<\/p>\n
Bank of America raises Intel stock price target<\/p>\n
In a research note shared with me, Bank of America analyst Vivek Arya and his team updated their opinion on Intel stock following the preliminary agreement with Apple.\u00a0<\/p>\n
The team estimates that Apple\u2019s deal with Intel represents a potential addressable opportunity of $35 to $40 billion or more for Intel, with an approximately 25% share representing $10 billion or more per year in potential sales over time.<\/p>\n
Analysts said they are not yet incorporating the potential Apple deal into their Intel model.<\/p>\n
Arya wrote: \u201cWe note even if a formal deal comes out tomorrow, it would still likely require another 2-3 years for the formal capex buildout, qualification, tapeout, etc.\u201d He added that Intel management has consistently said that additional wafer customers would require additional capex, and that meaningful volume might only start in 2028 and beyond.<\/p>\n
Related: Goldman Sachs resets Nvidia stock forecast ahead of earnings<\/p>\n
Analysts said the ramp-up of these fabs would be initially gross-margin dilutive, which means Intel management\u2019s outlook of foundry operating margin breakeven by 2027 could be delayed by another one to two years.<\/p>\n
Arya reiterated an underperform (sell) rating for Intel stock and raised the price target to $96 from $56, based on a conceptual sum-of-parts valuation that values internal IDM at $74 and external foundry at $21 to $22, in line with competitive peers.<\/p>\n
Analysts noted downside risks for Intel stock:Lower-than-expected ramp at Intel Foundry, particularly for its new 18A and upcoming 14A nodesLack of material external foundry customer in wafer processingWeaker-than-expected trends in a mature PC marketAccelerated share loss to major CPU competitorsUpside risks:Key external foundry packaging\/wafer deals that could significantly boost sales\/utilizationGreater-than-expected yields\/ramps at 18A and upcoming 14A nodesStronger-than-expected PC market from Windows 10 refresh or AI upliftGeopolitical tensions boosting sentiment for domestic manufacturing assets<\/p>\n
Related: Goldman Sachs resets Broadcom stock forecast<\/p>\n
#Bank #America #revamps #Intel #stock #price #target<\/p>\n","protected":false},"excerpt":{"rendered":"
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