UBS raised its price target on Intel (NASDAQ: INTC) to $52 from $49 while maintaining a “Neutral” rating, according to its latest research note.
The firm’s revision reflects growing confidence in Intel’s long-term strategic direction, even as short-term operational challenges continue to weigh on investor sentiment.
This blend of optimism and caution underpins UBS’s current stance. While the firm acknowledges progress in Intel’s broader transformation, it expects near-term execution hurdles to constrain upside over the coming quarters.
Server Constraints and Competitive Pressures
A primary concern for UBS is expected supply tightness in the first quarter, which could limit Intel’s ability to capitalize on strengthening demand for server processors.
Specifically, the firm noted that Intel’s server shipments remain heavily concentrated in Sapphire Rapids and Emerald Rapids processors, both built on Intel’s 7-class manufacturing process. These products continue to encounter yield-related challenges, which UBS believes could restrict shipment growth.
Consequently, Intel may struggle to capture a meaningful share of AI-driven server spending. UBS also warned that ongoing supply constraints could open the door for intensified competition from Advanced Micro Devices (NASDAQ: AMD).
PC Market Headwinds Add to Near-Term Risks
Beyond the data center segment, UBS sees limited support from Intel’s PC business in the near term. Although Intel has improved its product roadmap, the firm expects the broader PC market to contract this year.
UBS said that elevated memory prices remain a key drag on demand. Consequently, PC-related gains are unlikely to offset weakness in other areas of the business.
Foundry Outlook Supports Higher Target
Despite these headwinds, UBS pointed to growing confidence in Intel’s foundry ambitions as the main reason for the higher price target. Specifically, the firm expects Intel to secure external foundry customers later this year, following the anticipated release of its 14A production design kit.
Notably, UBS identified Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), and a potential high-end consumer electronics company as possible partners. This pipeline, the firm said, supports a more constructive long-term valuation.
Still, UBS tempered its optimism by highlighting Intel’s profit-sharing agreements with Apollo and Brookfield. Roughly half of future incremental profits are expected to flow to those partners under existing financing deals. Additionally, the firm cautioned that Intel’s transition to its 18A process technology could lift foundry margins while pressuring product margins.
Earnings Beat Overshadowed by Outlook
Meanwhile, investor focus on these longer-term prospects was overshadowed by the market reaction to Intel’s latest earnings report. Shares fell more than 17% to $45.02 after the company issued weaker-than-expected guidance, despite posting a fourth-quarter earnings beat.
Intel reported adjusted earnings of $0.15 per share, topping the $0.08 consensus estimate. At the same time, revenue of $13.67 billion also beat expectations.
However, sentiment quickly turned after Intel projected current-quarter revenue of $11.7 billion to $12.7 billion, below analyst expectations. In addition, the company signaled caution by guiding for flat adjusted earnings.
Mixed Analyst Reactions and Stock Performance
Following the earnings release, analyst reactions were mixed. Needham reiterated its “Hold” rating, while Benchmark maintained a “Buy” rating and raised its price target to $57. Meanwhile, Rosenblatt retained a “Sell” rating and lifted its target to $30.
Despite the recent selloff, Intel’s longer-term stock performance remains strong. In fact, the shares continue to trade above key moving averages, standing 4.18% above the 20-day SMA and 13.05% above the 50-day SMA. Over the past year, the stock has more than doubled, thereby underscoring sustained upward momentum.
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