The Stock of Intel Sheds a Bear as It Awaits a Key Catalyst

The pessimistic stance on Intel Corp. saw a reduction as a BofA Securities analyst adjusted his negative outlook on the stock. Vivek Arya of BofA, while maintaining concerns about Intel, highlighted a shift in sentiment due to positive developments in certain segments of the company's business. Although he remains wary of limited upside potential in the PC market and Intel's loss of server market share to Advanced Micro Devices Inc. (AMD) and ARM Holdings PLC, Arya expressed optimism regarding the Mobileye autonomous-driving unit and Intel's foundry plans.

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Despite persistent concerns, Arya believes Intel is undervalued when assessed on a sum-of-the-parts basis. This perception could undergo changes as the company proceeds with separating its design and manufacturing financials early next year. The anticipated separation is expected to facilitate a more comprehensive comparison of each business unit with its respective comparables.

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Moreover, Arya pointed out Intel's intention to potentially spin off its field-programmable gate-array business into a distinct public company. This strategic move could potentially trigger a revaluation of the stock on a sum-of-the-parts basis. Reflecting this shift in perspective, Arya upgraded Intel's stock from underperform to neutral in his latest note and adjusted his price target from $32 to $50.

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In a notable shift, Arya also revised his stance on AMD, upgrading the rating from neutral to buy and increasing the price target from $135 to $165. Arya sees AMD as well-positioned to capture additional market share in the highly profitable $100 billion-plus accelerator market. Simultaneously, he acknowledges the progress AMD is making in server central processing units (CPUs) against the incumbent Intel.

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While Arya still considers Nvidia Corp.'s stock as his preferred choice for playing trends in compute and artificial intelligence, he emphasized that AI and generative AI represent multi-year phenomena with opportunities for various players.

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Following these updates, AMD shares experienced a 0.6% increase in late Friday's session, while Intel's stock saw a 1.9% uptick. The adjustments in analyst perspectives reflect a nuanced evaluation of the evolving landscape in the semiconductor industry, considering both challenges and potential growth areas for key players like Intel and AMD.