Intel, a stock that many investors had silently dismissed, has recently been on the receiving end of a great deal of attention. The stock of Intel has experienced an increase of approximately
150% since August, which is a move that can be described not only as a rebound, but almost as a whole comeback. At this point, Wall Street is slowly but surely recognizing that it might have underrated the chipmaker’s transformation.
An analyst at KeyBanc Capital Markets, John Vinh, has upgraded Intel to Overweight and has also put a new high price target of
$60 on the stock, implying that the rally may not have reached its peak yet. In any case, Intel has clearly demonstrated to the market that it still possesses the ability to surprise.
Foundry Bet is Paying Off
The main reason for Intel’s return is its long- discussed, and frequently doubted foundry business. For years, Intel has claimed it could be a robust contract manufacturer for other chip designers and for just as long, investors have waited skeptically. This waiting period might finally be over.
Key-Banc suggests that the market is still not taking fully into account the progress Intel has made, particularly in relation to its advanced 18A manufacturing node. However, the major news here is Apple.
As per the reports, Intel has secured Apple as a customer for 18A, with the technology being used in lower-end Macs and iPads.
This is Intel’s first substantial design victory at that node and it is the kind of customer endorsement that tends to catch Wall Street’s attention very quickly.
Performance Gains and AI Demand
Intel is no longer referring to future potential, as the chips made with the 18A process are actually being shipped. The management is claiming a remarkable increase in performance as compared to the previous generations, which, to some extent, has helped restore the long-lost credibility of Intel’s manufacturing capabilities.
The current AI buildout is indeed a timely tailwind. As Vinh mentions that the entire Intel’s CPU supply for the year is nearly sold out, which is the result of demand from data centers that are striving to deal with the AI workload. Intel may not be the leader in AI accelerators like some of its competitors, but it is benefiting greatly from the huge infrastructure investments that the sector is undergoing.
Strategic Importance Meets Political & Industry Support
The rising strategic importance of Intel is like an icing on the cake of this bullish case. On one hand, KeyBanc mentions the huge investments from the likes of SoftBank and Nvidia as proof that Intel is not only important for its quarterly performance, but also for the world. On the other hand, political support has also become a part of this case.
The recent remarks from the U.S President Donald Trump in favor of Intel’s leadership does not only highlight, but also confirms the company’s role in the wider debate on domestic chip manufacturing and technological independence. When a business starts to feature both in investor presentations and in policy discussions, it is likely becoming larger, and not any smaller.
Bottom Line
Intel’s stock lately has undergone substantial fluctuations, yet it is still falling in the more graceful investor story. With concrete steps in the development of its foundry business, a high-profile customer like Apple, robust AI-related requirements, and increasing strategic importance, Intel is starting to appear as a company that has really turned around, and has not just been lucky.
There are still obstacles to overcome and execution will still be very important, but the new $60 price target set by Wall Street is based on the assumption that Intel’s transformation is genuine. For a stock that has long been dismissed, this is a radical change in the story that is definitely worth watching.