Expect Intel to beat earnings expectations and raise guidance when the chip maker reports third-quarter earnings on Thursday, says BofA Securities.
Intel stock has struggled coming into the report, falling 32% to $95.53 from its all-time high on June 22. But shares are still up 159% since the start of the year, buoyed by robust demand and support from the Trump administration. Intel was a Barron's stock pick in April.
The earnings print presents a chance for Intel to get back on track.
Average sales prices for central processing units, or CPUs, are on the rise, according to BofA analyst Vivek Arya. The consensus is that these processors are better for executing artificial-intelligence tasks than graphics processing units, or GPUs, which dominate AI model training.
Intel should benefit from both continued demand for the CPUs that power AI servers and an improving supply chain, Arya says. The firm has a Buy rating and a $145 price target on Intel stock.
All told, analysts polled by FactSet estimate Intel will report adjusted earnings of 41 cents a share for the third quarter, up from 23 cents a year ago. Revenue is expected to rise 21% year over year to $16.5 billion, driven by growth in Intel's data-center and AI segment.
"We think the setup on the top line remains quite strong," UBS analyst Timothy Arcuri wrote in a note last week. UBS reiterated a Neutral rating and trimmed its price target to $103 from $112.
Investors will have plenty to parse other than the earnings and revenue data. Intel is trying to kick-start its foundry business and compete for chip manufacturing customers with Taiwan Semiconductor Manufacturing. Arcuri expects to see more momentum in Intel's EMIB-T chip-packaging and 14A manufacturing processes, which are key to the foundry's competitiveness.
Another potential topic: Elon Musk. Intel is working with Tesla and SpaceX on the Terafab AI chip venture, and Musk last week floated some "significant potential breakthroughs in chip fabrication." Intel shares had sank after Musk signaled earlier in the month that he was in talks with TSMC to help run Terafab.
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