SKN | Bank of America Downgrades Intel as PC Weakness and Supply Constraints Delay Turnaround

Key Takeaways:

• Bank of America downgraded Intel from Buy to Neutral and reduced its price target from $145 to $100, citing weaker PC shipments and supply constraints.
• Despite Intel’s third-quarter adjusted earnings of $0.52 per share and revenue growth of 21% to $16.5 billion, its fourth-quarter guidance fell short of analyst expectations.
• BofA reduced its 2027 and 2028 earnings-per-share estimates by 16% and 4%, respectively, while identifying external foundry customer wins as a potential catalyst for a longer-term recovery.

Bank of America has lowered its assessment of Intel’s near-term prospects, downgrading the semiconductor company from Buy to Neutral and cutting its price target from $145 to $100. In its latest research note, the bank argued that weaker personal computer demand, manufacturing supply constraints, and limited progress in attracting external foundry customers have delayed Intel’s turnaround. The reassessment followed the company’s third-quarter 2026 earnings release, which delivered stronger-than-expected results but included a weaker outlook for the next quarter.

Bank of America Reassesses Intel’s Earnings Trajectory

Intel reported third-quarter adjusted earnings of $0.52 per share, exceeding analyst expectations of $0.40. Revenue increased 21% year over year to $16.5 billion, marginally above the consensus estimate of $16.48 billion.

However, BofA’s reassessment centered on the company’s fourth-quarter guidance. Intel projected revenue between $15 billion and $16 billion, below the analyst consensus of $17.08 billion. At the midpoint, the forecast represents a shortfall of approximately 9%. Adjusted earnings are expected to reach $0.25 per share, compared with the $0.44 anticipated by analysts.

BofA analyst Vivek Arya argued that the earnings report did not demonstrate sufficient progress in attracting external foundry customers, while the anticipated decline in PC shipments created an additional challenge for the business.

PC Weakness and Supply Constraints Complicate Recovery

According to BofA, Intel faces an expected 25% to 30% quarter-over-quarter decline in PC shipments during Q4, followed by further inventory correction in the first half of 2027. This creates pressure on the company’s traditional computing business at a time when it is attempting to strengthen its position in higher-growth semiconductor markets.

The bank acknowledged that data-center CPUs are benefiting from increasing demand associated with agentic artificial intelligence. However, it also identified tight substrate supply as a constraint on the company’s ability to capitalize on that demand.

BofA further noted that Intel’s products remain technically less competitive than offerings from AMD and Arm-based competitors, which the bank said are growing two to four times faster. These competitive and operational pressures complicate Intel’s efforts to restore its market position.

Lower Earnings Estimates Reflect Delayed Turnaround

Following its reassessment, BofA reduced its 2027 earnings-per-share estimate by 16% to $1.69 and its 2028 estimate by 4% to $2.79. The bank also lowered its 2030 earnings-power estimate to a range of $5 to $6 per share, from its previous projection of $6 to $7.

Despite the downgrade, BofA identified a potential longer-term opportunity in Intel’s domestic foundry business. The bank indicated that external customer wins involving Intel’s 18A-P or 14A manufacturing processes could support a reassessment of the business’s value. Its updated valuation includes approximately $100 billion for the foundry operation within an implied total market value of $550 billion at the new price target.

What Investors Should Monitor Next

BofA’s revised position places greater emphasis on Intel’s ability to demonstrate tangible manufacturing progress, secure external foundry customers, and stabilize demand across its PC business. The bank also highlighted potential implications for AMD ahead of its upcoming earnings report, estimating that PC weakness could create a headwind of up to $750 million, partly offset by stronger server CPU revenue. For investors assessing Intel’s recovery, the coming quarters will be important in determining whether its manufacturing ambitions and data-center opportunities can compensate for continuing competitive and demand-related pressures.

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