HSBC retains a Buy rating on Intel (INTC) and doubles its target price to USD200, incorporating the foundry business into its valuation for the first time. The upgrade is driven by strong server CPU demand and traction with external foundry customers like Google and Apple.
Key Takeaways
- 1.Raised target price to USD200 (from USD100) on inclusion of Intel Foundry in SOTP valuation.
- 2.Server CPU shipments are expected to grow 25% y-o-y in 2026 and 30% in 2027.
- 3.Intel is gaining external foundry customers like Google and Apple for logic chips and packaging (EMIB).
Table of Contents
- Financials & valuation: Intel Corp
- Why the Foundry business warrants inclusion in our SOTP now
- Server CPU key to earnings growth with room for upside surprise
- Consensus undervaluing DCAI despite aggressive estimate increase post 1Q26 results
- Sensitivity analysis – room for significant upside from further price hikes
- Improving foundry narrative could come to fruition soon
- Front-end foundry narrative keeps getting better
- Advanced packaging could be a more immediate catalyst driving earnings upside
- Front-end and EMIB combine to drive our foundry revenue estimate increase
- Sensitivity analysis on broader EMIB adoption shows meaningful earnings upside
- Positive foundry momentum could drive upside to capex
- Intel Foundry leadership hirings support ambition
- Valuation and risks
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Authors
Frank LeePulkit Aggarwal
Securities
INTC
Themes
Advanced Packaging (EMIB)AI Infrastructure DemandFoundry Business ExpansionServer CPU Growth
Regions
North AmericaUnited States