BofA: Intel
Investment Rating & Price Objective
> Rating & Price Objective: Maintain BUY with a Price Objective (PO) of $160.00 USD (against a stock price of $91.67 USD).
> Valuation Basis: Based on 31x CY30E EPS power of $6+, discounted back two years to account for long-term server CPU and external foundry wafer/packaging opportunities.
Server & Market Positioning
> Supply-Driven Share: Server market share through 2026–2028 is viewed as a function of supply rather than design. Coral Rapids (slated for 18A-P in 2027) will further help close the performance gap against competitors.
> ASP Strength: Q2 server Average Selling Price (ASP) jumped +48% YoY, driven by higher core-count Granite Rapids adoption.
> Competitive Edge in AI: Intel argues that agentic AI workloads vary in requirements and may not always favor ARM or AMD. Intel’s NVLink design-in establishes a level playing field for system-level integration, while x86's security lead provides an advantage in enterprise AI.
> PC TAM: The PC Total Addressable Market (TAM) is tracking for a 10–12% YoY decline in 2026, though Intel sees limited inventory risk due to clear sell-in vs. sell-through visibility.
Intel Foundry Progress
> Yields & Margins: Under CEO Lip-Bu Tan, 18A/4/3 nodes are showing upside on yield, cycle times, and unit costs. 18A yields are expected to approach industry standards by the end of 2026, with a path to operating margin (OpM) breakeven by 2027 (excluding external customers).
> External Nodes (18A-P & 14A):
18A remains internal-only, while 18A-P targets external customers (risk production underway, 2027 volume committed).
14A High Volume Manufacturing (HVM) has been committed for 2028, featuring external customer engagements from the outset.
> Long-Term Financial Goals: Long-term gross margin targets are set at mid-40%+ to 50%+. Multiple financial levers—including prepayments, non-core asset sales, and equity—are available to support rising capital expenditure intensity.
Advanced Packaging (EMIB)
> Backlog & Ramps: The EMIB-T (Through-Silicon Via variant) backlog is actively building for a 2027 ramp-begin and full 2028 ramp.
> Revenue Potential: Each packaging engagement is projected to be worth multiple billions of dollars per year.
> Capacity & Constraints: Assembly and packaging (A/P) capital intensity is lower than wafers (roughly 1 to 5), and Intel already has capacity to handle multiple engagements in 2027. Current supply constraints are centered on external substrates, which are being managed via supplier prepayments.
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