Intel's stock pops as it finds a growing chorus on Wall Street

By Britney Nguyen

Intel's manufacturing business looks competitive, 'or at least viable,' for the first time in a decade, according to a new bull

Intel's stock has more than doubled over the past 12 months.

Analysts who missed out on Intel's strong stock momentum over the past year are now changing their tune.

Two analysts upgraded Intel's stock (INTC) ahead of Tuesday's open, with one abandoning an outright bearish stance and the other moving from the sidelines to a starkly bullish view. Both cited early signs of improvement for Intel's foundry business, even while noting it has a long way to go before becoming a major industry player.

HSBC analyst Frank Lee said he was taking a more positive view of Intel, as its traditional server business is expected "to get back on a growth trajectory" as agentic artificial intelligence boosts demand for the company's server central processing units.

Lee previously rated Intel's stock at reduce, and while his new hold rating doesn't scream "buy," it acknowledges that agentic AI looks like it could be a spark for Intel's core business.

"As AI moves from simple assistants to autonomous agents that plan and execute tasks, the requirement for general-purpose compute is accelerating," he wrote, referring to operations handled by CPUs.

Therefore, he sees market demand for server chips growing between 30% and 40% annually in 2026. Constraints on memory-chip supply could cut the actual growth outlook in half, he acknowledged, but it would still come out well ahead of Wall Street's estimates for between 4% and 6% annual growth.

See more: Micron's stunning stock gains are encapsulated by this milestone

Intel's stock is up 25% so far this year, while the S&P 500 is essentially flat. Lee thinks further upside from Intel's traditional server business is "still not fully priced in" to the shares. The stock has jumped 126% in the past year and is up almost 5% in Tuesday's session alone.

While Intel's foundry side has faced issues around execution and has no visible external customers right now, Lee said there is increasing engagement between Intel and external customers. Lee added that Nvidia (NVDA) could possibly turn to Intel's foundry for its gaming graphics processing units, while Apple (AAPL) is reportedly discussing using Intel's foundry for its M-series processors.

Seaport analyst Jay Goldberg also noted "an improving outlook" for Intel's foundry business as he upgraded the stock to buy on Tuesday.

The launch of Intel's Panther Lake processors at the Consumer Electronics Show earlier this month could drive improvements to Intel's enterprise and consumer products, Goldberg said. It also marked the company's debut of its 18A process node.

So far, 18A looks "highly performant, meaning that Intel is competitive (or at least viable) again in manufacturing for the first time in almost ten years," Goldberg said. And Intel seems to have some interest from external customers in the 18A-P variant, he added.

Don't miss: Intel's stock is popping. Here's how it can become an AI winner and rack up even more gains.

But the foundry "still has a long way to go before we can contemplate viability," Goldberg said, adding that the 18A node "was never going to be enough to 'save' Intel."

The competitiveness of Intel's foundry lies in whether it can deliver on the upcoming 14A process, Goldberg said - and that likely won't launch until 2028.

"That being said, while Intel is not out of the woods in terms of competitiveness, the strong showing for Panther Lake shows the company is at least back on the right path," Goldberg said.

Constraints in AI-chip packaging could also help Intel reach external customers for its Embedded Multi-die Interconnect Bridge advanced packaging technology in fiscal 2027, HSBC's Lee said. Goldberg sees most of Intel's external foundry customers going for its advanced packaging, too, which he said should be helped by constraints at Taiwan Semiconductor Manufacturing (TSM).

-Britney Nguyen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-20-26 1307ET