So we know that chip stock Intel (INTC) has been struggling to win back market share after losing a lot of ground to its various rivals over the years. But we also know that Intel has been avidly courting those same competitors to handle their production opportunities in its foundry operations. This dichotomy of being both partner and competitors is leaving some concerned, and calling for a sale of the foundry division. This is shaking up investor confidence, and shares slipped fractionally in Monday afternoon’s trading.
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Former board member David Yoffee expressed the problem in a nutshell, suggesting that major processor makers like Nvidia (NVDA) and AMD (AMD) would not want to “…give…Intel access to that secret sauce” that goes into the production of their chips. This interest in preserving key confidential elements of technology would, in turn, preclude any of these companies from putting very much volume in Intel’s hands.
Thus, Yoffee called for Intel to separate the foundry business from the product business, and give each a better chance at success. The concerns are valid, certainly. But reports note that Intel has already been working to make Intel Foundry an independent operation, and thus keep the “secret sauce” out of Intel Products’ hands. And indeed, John Pitzer—a vice president at Intel—noted that if there were any extra value in launching such a spin-off effort, Intel would indeed undertake it.
Credit Upgrade
Meanwhile, Bank of America analyst Tom Curcuruto gave Intel a bit of a boost in the credit rating department. Curcuruto upgraded intel from Marketweight to Overweight, noting that Intel was much more stable than it once was, and has also improved both its liquidity and its overall relative value. Better yet, one of Intel’s biggest failures might actually help it here.
Curcuruto described how Intel might be “…insulate(d)…from broader AI investment overheating concerns” as Intel has lower overall exposure to AI demand. And it got better from there. Curcuruto pointed out that Intel’s recent asset sales and equity investments have improved its credit metrics, and with free cash flow set to return—a development not seen since 2023—the end result is a win for Intel.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on five Buys, 22 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After an 82.28% rally in its share price over the past year, the average INTC price target of $38.09 per share implies 4.16% upside potential.
