Intel's stock has been riding on a wave of good news recently, but one analyst says he's unsure if the company's upcoming earnings report can send it even higher.
The chip maker's stock $(INTC)$ closed up 4.5% on Monday, marking its ninth consecutive day in the green, and its best nine-day stretch on record, according to Dow Jones Market Data. The company's shares are up 58.29% over that period, the data showed.
Going into Intel's earnings report at the end of the month, UBS analyst Timothy Arcuri said he expects strong results and guidance given demand for personal computers is "resilient," and demand for server central processing units is moving "materially higher." Intel has also been able to raise prices for its server CPUs by about 10%, Arcuri noted. He expects demand to continue climbing for the rest of the year, specifically in its enterprise segment that he estimates makes up about 60% of its overall revenue for server CPUs.
"Whether this will be enough to drive the stock higher is a bigger question," considering that it has already risen about 40% in the past month, Arcuri said in a Monday note.
Intel's stock currently trades at about 20x the bull-case consensus for 2030, Arcuri said, and in his view, that "suggests upside from current level is somewhat limited."
Still, Arcuri said the expected release of Intel's process-design kit for its upcoming 14A process node, which it will build future chips on, will be "a key foundry catalyst." Wall Street has viewed 14A as crucial to Intel attracting external customers for its foundry, and regaining leadership in chip manufacturing.
On that, Arcuri said he expects Intel's stock to be "biased higher" for the rest of the year.
Intel has recently cut a series of chip deals that have both investors and Wall Street more upbeat about the future of its foundry business.
For one, Intel announced a partnership earlier this month with Elon Musk's Terafab, which will focus on manufacturing chips for Tesla $(TSLA)$, SpaceX and xAI. A case where Intel's chip fab in Ohio merges with this venture "would add even more confidence in the outlook for the foundry business," Arcuri said - though that would be a longer-term story given how long it would take to set up the operation.
Intel has also said that it was repurchasing its 49% equity interest in a joint venture related to its Fab 34 in Ireland, which Arcuri previously called "a very big first step to reinject operating leverage into" its funding model for its chip-making facilities.
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Arcuri had said in his earlier note that exiting its SCIP with Brookfield Asset Management (BAM) for its chip fabs in Arizona would benefit the company's earnings per share even more. Intel's Semiconductor Co-Investment Program allows it to partner with investors to fund its manufacturing expansion while keeping majority control.
However, Arcuri said in his Monday note that now he is unsure about Intel's longer-term earnings power even if it did buy back its stake from Brookfield.