Key Takeaways
- Jefferies boosts Intel's price target by 50% to $120 from a prior $80.
- The upgrade reflects surging CPU demand from the agentic AI sector.
- Intel's turnaround and foundry model are key to its AI-era strategy.
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Jefferies raises Intel price target to $120 on agentic AI boom
Jefferies raised its price target on Intel Corp. (NASDAQ:INTC) by 50 percent to $120, up from a previous target of $80, as the firm sees growing demand for the chipmaker’s central processing units, or CPUs, from the rise of agentic artificial intelligence.
"The ratio of CPUs to GPUs [in AI servers] used to be 1-to-8, and now it is 1-to-4, and I think it could move toward parity or even better," Intel CEO Lip-Bu Tan said on the company's recent earnings call. "We have made a lot of changes in terms of CPU architecture to optimize for different workloads."
The significant price target hike follows a strong first quarter for Intel, where data center revenue surged 22 percent to over $5 billion, beating earnings estimates and providing second-quarter revenue guidance well above analysts' consensus expectations. The upgrade puts Jefferies' target price at one of the highest on Wall Street, reflecting a bullish outlook for the semiconductor giant.
The enthusiasm stems from the critical role CPUs play in the new wave of agentic AI. While GPUs handle the heavy lifting of training AI models, CPUs are essential for executing tasks by managing memory, coordinating workloads, and extracting data. This has shifted focus back to CPU manufacturers like Intel and rival Advanced Micro Devices Inc. (NASDAQ:AMD).
A Turnaround Story Turbocharged by AI
Intel's stock has surged over 186 percent year-to-date, a sharp reversal from previous years when investors were concerned the company had missed the initial AI boom. The company's multi-year turnaround strategy, centered on its foundry model of controlling manufacturing from fabrication to packaging, appears to be gaining traction. The formal launch of Intel Foundry in 2024 was a direct move to cater to the AI era.
In contrast, AMD operates a fabless model, designing its chips but outsourcing manufacturing to partners like Taiwan Semiconductor. While AMD has a stronger current position in the data center GPU market, Intel's control over its full stack is seen as a potential long-term advantage, giving it greater control over its production and destiny.
Valuation in Focus
The recent rally has pushed valuations for both chipmakers higher. Even with projected adjusted earnings per share of $1.08 in 2026, Intel trades at over 104 times forward adjusted EPS and nearly 10 times forward sales. AMD, which also had an outstanding quarter, trades at 57 times forward expected earnings and 14 times forward sales.
The price target increase suggests Jefferies believes Intel's strategic shift and the expanding addressable market for its CPUs in the agentic AI space justify a higher valuation. The move may prompt other analysts to re-evaluate their models, potentially providing further support for the stock. Investors will be closely watching Intel's next earnings report for continued growth in its data center segment and updates on its GPU ambitions.
This article is for informational purposes only and does not constitute investment advice.
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