Intel: Near-Term Earnings Constraints Balance Long-Term Foundry Upside, Supporting Hold Rating

Timothy Arcuri, an analyst from UBS, maintained the Hold rating on Intel. The associated price target was raised to $52.00.

Timothy Arcuri has given his Hold rating due to a combination of factors tied to Intel’s near‑ and medium‑term earnings outlook. While recent quarterly results modestly exceeded expectations on profitability, the company’s guidance for the upcoming quarter points to weaker revenue growth and compressed margins, largely because of supply bottlenecks and the need to prioritize certain business segments. In data center, Intel is still heavily reliant on older Sapphire/Emerald Rapids products built on Intel 7, where structural yield challenges constrain its ability to capitalize on the current surge in AI-driven server demand, especially versus AMD. On the PC side, even though Intel’s product roadmap looks stronger, overall market conditions are unfavorable as elevated memory costs are likely to weigh on end demand, limiting the benefit from these product improvements.
At the same time, Arcuri sees a more compelling long-term narrative in Intel’s foundry ambitions, including the potential for meaningful external customer wins once the 14A production design kit is released later this year, which underpins a modest increase in his price target. However, he remains cautious about the company’s earnings power because a material portion of future incremental profits is being shared with financing partners Apollo and Brookfield, and the transition to advanced 18A-based products, while supportive for foundry margins, could pressure product-level profitability. With the stock having already rallied significantly and the more optimistic scenario for substantial upside still several years away, he concludes that the risk/reward profile is balanced at current levels, justifying a Hold rating despite a slightly higher sum-of-the-parts valuation and improved confidence in future foundry deals.

In another report released today, Citi also maintained a Hold rating on the stock with a $48.00 price target.