Wall Street analysts indicate that after years of struggle and ceding market share to rivals, Intel's first-quarter earnings and guidance suggest the tech giant has rediscovered its competitive spark. This resurgence is largely attributed to the rise of Agentic AI. In pre-market trading on Friday, Intel's stock surged 27%, while competitors AMD and Arm saw gains of approximately 10%.
Intel projected second-quarter revenue between $13.8 billion and $14.8 billion, with the midpoint of $14.3 billion significantly surpassing the analyst consensus estimate of $13 billion. The company also forecast adjusted earnings per share of $0.20 for the quarter, well above the average estimate of $0.09, and expects a gross margin of 39%.
An analyst from Wedbush Securities noted, "Management hinted that despite exceptionally strong sales, customer computing demand—primarily for server CPUs—remains unmet, with the shortfall quantified in the 'billions' of units." While expressing some reservation regarding Intel's view that consumer PC makers will rebuild inventory, the analyst affirmed that Intel, due to its ability to expand internal wafer supply, is the best positioned to serve the above-expectation growth in demand for server CPUs driven by inference workloads and Agentic AI.
The analyst added, "This context, in turn, leads us to believe that the business improvement Intel enjoyed in the first and second quarters is sustainable." Following the earnings report, the analyst maintained a 'Neutral' rating on Intel but raised the price target from $30 to $60.
An analyst from Jefferies also highlighted the Agentic AI boom but suggested this surge might temporarily obscure other underlying issues within the company. The analyst wrote, "A surge in XPU utilization is driving genuine server CPU demand. Intel noted server shipments achieved double-digit growth, with momentum expected to extend into 2027, though AMD's growth might be stronger. The PC business appears to be softening, with management 'prudently planning' for weaker PC demand in the second half of the year and indicating the total addressable market for full-year PC unit shipments would see a low double-digit percentage decline."
The Jefferies analyst continued, "We still believe AMD is in a more favorable position in the server market, and the gap is expected to widen further with the anticipated launch of the Venice (2nm) architecture in the second half of 2026 or first half of 2027. In the interim, Intel remains a clear beneficiary of the structural demand backdrop, and we expect the supply-demand imbalance to firmly favor the company for the foreseeable future." This analyst also maintained a 'Hold' rating on Intel but increased the price target from $40 to $60.
An analyst from Morgan Stanley expressed a similar view, anticipating strong CPU demand would persist as shortages "could last for a while." However, the analyst expressed caution regarding Intel's positioning. The analyst wrote, "CPUs are clearly more important for Agentic workloads, but we disagree with simplistic calculations regarding the CPU-to-GPU ratio. Intel discussed historical cluster ratios shifting from 8:1 to 4:1 or lower—but this figure is inaccurate because, for instance, Bianca cards have a head node CPU for every two GPUs, plus host nodes."
"This is also somewhat misleading because the vast majority of Intel CPUs are not in AI data centers, so AI growth only impacts a relatively small portion of its shipments. Furthermore, there is market share pressure: NVIDIA is shifting some CPU racks from Intel to Vera; Trainium is moving head nodes from Intel to ARM; both TPU and Trainium are transitioning host nodes from x86 to ARM. And AMD will naturally favor its own CPUs. Therefore, most significant CPUs in the AI space face headwinds from potential share loss. Intel does have its own fabs, which is meaningful during shortages, but AMD could clearly state they can secure more wafers if needed; we certainly don't expect AMD to lose share over the medium term." The Morgan Stanley analyst maintained a 'Hold' rating on Intel but raised the price target from $56 to $73.
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