Prior to Intel (INTC.US) reporting its first-quarter earnings after the market closes on Thursday, April 23, Eastern Time, both BNP Paribas and HSBC have raised their ratings and price targets for the company. This reflects expectations that Intel will continue to benefit from robust demand for AI server chips. BNP Paribas upgraded Intel to "Neutral" and increased its price target to $60. Analyst David O'Connor stated, "Intel's stock has surged 86% year-to-date, a move that, in our view, has detached from fundamental trading logic. Continuously positive data related to the 14A process has significantly boosted market expectations for the project's successful implementation. Concurrently, the vigorous development of Agentic AI is driving strong demand for Intel's server chips, thereby increasing chip capacity utilization and product pricing levels. Nevertheless, the key future consideration remains whether the 14A process can secure more chip design orders." O'Connor further noted that due to the growth in server CPU demand driven by Agentic AI, Intel is well-positioned to reap ongoing benefits. He added, "The rise of Agentic AI is fueling strong demand for server CPUs, with hyperscale cloud providers scrambling to secure chip supply. Although Intel still lags in product and process capabilities, it remains a primary beneficiary thanks to its approximately 60% share of the server market. This also prompted Intel to repurchase the 49% stake held by Apollo Global Management in its Irish Fab 34 facility earlier this month." O'Connor also pointed out that his previous concerns about Intel falling behind AMD and Arm in the server market persist, but in the current market environment, these worries have become "less significant." HSBC upgraded Intel from "Hold" to "Buy" and raised its price target from $50 to $95. HSBC holds a highly positive view on the sustained demand for Intel's server CPUs, stating that this factor provides a greater boost to the semiconductor giant than the expansion of its foundry business. Analyst Frank Lee wrote in a note to clients, "Against a backdrop of overall tight foundry capacity, Intel is reallocating its wafer production capacity, specifically shifting Intel 3 and Intel 7 capacity from client CPUs to server CPUs. This is expected to drive a 20% year-over-year increase in its server CPU shipments for 2026. In an environment of high demand and constrained supply, we anticipate Intel will implement significant price increases, pushing the average selling price up by 20% year-over-year. We believe the server CPU shortage will persist into 2027, potentially driving another 20% year-over-year shipment increase and a further 10% price rise in that year." He stated that the positive impact from Intel's server CPU business is expected to become evident starting in the second quarter, with the company's quarterly revenue potentially reaching $14.2 billion, which would be 9% above Wall Street expectations. He added that the price increases would boost gross margins, further supporting Intel's financial performance.
Comments