To The Moon

Citigroup upgraded its rating on Intel (INTC.US) on Thursday and removed Micron Technology (MU.US) from its US Focus List. Intel's rating was raised from "Sell" to "Neutral," with a price target set at $50. Citigroup's analysis indicates that Intel stands to benefit from the tight supply of advanced packaging capacity at Taiwan Semiconductor Manufacturing Company (TSMC.US). Furthermore, the bank's analyst, Atif Malik, stated that Intel "has a unique window of opportunity to attract foundry wafer customers with government support." Malik further added, "We believe that as Intel's 18A-P/14A process yields improve, the company will be the first to capture the spillover effects from AI-specific integrated circuits (such as TPUs) in the back-end, with these benefits subsequently extending to the front-end foundry customer segment." Despite positive factors, such as the US government's involvement as an investor and the potential for capital expenditure to "stabilize," Malik noted that Intel is not yet completely out of the woods. The analyst speculates that Intel is expected to cede some CPU market share to AMD (AMD.US) and Arm (ARM.US), while weakness in the personal computer market could potentially trigger an increase in memory prices. Micron Technology was removed from the US Focus List. The reason, according to Malik, is that the pricing momentum for Dynamic Random-Access Memory (DRAM) in the second quarter is likely to show a "slowdown" compared to the first quarter. Malik explained, "Micron's stock price typically moves in sync with quarter-on-quarter pricing trends." He further stated, "However, given constrained fab capacity and strong demand from the AI sector, we anticipate that the supply-demand balance for memory will be maintained through 2026/27."