Bank of America upgraded Intel (NASDAQ: INTC) to Neutral from Underperform after Lip-Bu Tan took the helm as CEO. The bank cites Tan’s “solid track record” and believes he can lead the U.S. chipmaker toward a successful turnaround.
The upgrade comes with a new price target of $25, up from $19. “We really like the new CEO appointment,” BofA analysts wrote in a note, signaling confidence in Tan’s leadership.
Tan previously led Cadence Design Systems (NASDAQ: CDNS), where he oversaw a remarkable 32-fold stock appreciation. The SOX index, by comparison, rose 16-fold during the same period, a fact BofA emphasized as a testament to his leadership.
Tan served on Intel’s board before, giving him deep knowledge of the company. His role as Chairman of Walden International also brings “breadth of relationships and investments across the US/Asian semi-industry landscape,” which BofA views as a strength.
Despite the optimism, BofA cautioned that Intel (NASDAQ: INTC) still faces significant challenges. Analysts noted “a lack of AI roadmap and increasing competition from ARM-based PC and server CPU rivals” as risks that could limit upside potential.
BofA suggested that improving market conditions might allow Intel to divest assets like Altera and its automotive division. Such sales could help the company “delever the balance sheet” and bolster its finances.
Meanwhile, BofA says Tan’s background in electronic design automation (EDA) could strengthen Intel’s partnerships with Cadence and Synopsys (NASDAQ: SNPS), which have “been under pressure due to uncertainty at this large customer.”
The report also mentioned unconfirmed rumors of a joint venture between Intel’s foundry division and TSMC. This could involve “fabless companies such as Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), Broadcom (NASDAQ: AVGO), and Qualcomm (NASDAQ: QCOM).”
Analysts noted that, if confirmed, such a deal “could aid INTC’s potential turnaround efforts under the incoming new CEO.” It remains speculative but adds to the cautiously optimistic tone.
Ultimately, BofA believes Tan’s leadership creates “a greater opportunity to restructure/turn things around.” Yet, they stress that Intel’s transformation “remains a work in progress,” and execution will decide its fate.
