SKN | HSBC Sees Another 60% Upside for Intel as Foundry Business Gains Momentum

Key Takeaways:

• HSBC doubled its price target on Intel to $200 and maintained a Buy rating, citing improving confidence in the company’s foundry business alongside continued strength in its server CPU segment.
• The firm believes Intel’s foundry operations are becoming a meaningful long-term value driver as major technology companies reportedly explore manufacturing partnerships.
• Growing demand for AI infrastructure and advanced semiconductor manufacturing continues to strengthen Wall Street’s outlook for Intel’s long-term earnings potential.

HSBC has significantly raised its price target on Intel Corporation (NASDAQ: INTC) to $200 from $100, while maintaining its Buy rating, reflecting increased confidence in both the company’s core processor business and its rapidly improving foundry operations.

The revised target implies approximately 60% upside from recent trading levels, even after Intel shares have gained more than 233% year-to-date, making the stock one of the strongest performers in the semiconductor sector.

Foundry Business Becomes a Major Growth Driver

HSBC believes Intel’s transformation into a contract chip manufacturer is becoming increasingly important to its long-term investment thesis.

While the company’s server CPU business is expected to remain the primary contributor to earnings growth through 2026 and 2027, the investment bank said Intel Foundry has reached a point where its improving outlook is “too good to ignore.”

The firm now includes the foundry business in its sum-of-the-parts valuation, reflecting growing confidence that external manufacturing contracts will become a meaningful contributor to shareholder value.

Major Technology Customers Support Outlook

Investor optimism has strengthened following reports that several leading technology companies are evaluating Intel’s advanced manufacturing capabilities.

According to reports, Tesla, SpaceX, Apple, and Alphabet’s Google have entered various agreements or engagements with Intel Foundry involving next-generation semiconductor manufacturing and advanced process technologies.

Intel has reportedly committed to providing its 14A manufacturing toolkit to selected customers, allowing them to evaluate the company’s latest chip fabrication process before making longer-term production commitments.

If these partnerships expand into large-scale manufacturing agreements, they could significantly improve foundry utilization and future revenue growth.

AI Investment Cycle Continues Supporting Semiconductor Demand

The broader semiconductor industry also continues benefiting from accelerating investment in artificial intelligence infrastructure.

Separately, Cantor Fitzgerald raised its Intel price target to $150 from $90 while maintaining a Neutral rating, citing expectations that the global AI infrastructure buildout will create a durable multi-year growth cycle across the semiconductor industry.

The firm now projects industry revenue could approach $3 trillion by 2029 and potentially exceed $3.5 trillion by 2030, supported by persistent demand for AI chips, data centers, and advanced computing infrastructure.

Challenges Remain Despite Improving Outlook

Although investor sentiment has improved considerably, Intel’s foundry business continues facing execution challenges.

During the first quarter, Intel Foundry reported an operating loss of approximately $2.4 billion, highlighting that the business remains in its investment phase as it works to secure additional customers and improve manufacturing scale.

Successful execution, customer adoption, and operational efficiency will remain critical factors in determining whether the foundry division can deliver sustainable profitability.

What Investors Should Watch

Investors should monitor additional foundry contract announcements, customer adoption of Intel’s advanced manufacturing nodes, AI-related semiconductor demand, server CPU performance, manufacturing execution, operating margins, and quarterly earnings updates. Progress toward reducing foundry losses while expanding external customer relationships will be particularly important for evaluating Intel’s long-term transformation strategy.

Closing Insights

Intel’s investment story is increasingly shifting beyond its traditional processor business as its foundry operations attract growing attention from major technology companies and Wall Street analysts alike. If management successfully converts early customer engagements into long-term production agreements, the company’s manufacturing business could become a significant driver of future growth alongside continued demand for AI and enterprise computing.

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