Intel Stock Jumps 5.6% After BofA Double-Upgrades to Buy from Sell

Intel’s stock has already tripled this year, and BofA Securities believes the rally will continue. Shares rose 5.6% on Thursday after BofA issued a rare double-upgrade, moving Intel from Underperform to Buy and raising the price target to $135 from $96. BofA’s optimism is based on two main points that Wall Street has not fully recognized: strong growth in the server CPU market and a foundry business that is starting to gain momentum. Here’s why BofA thinks there is still significant upside for a stock that most funds have yet to buy.

BofA expects the server CPU market to reach $170 billion by 2030, with Intel earning over $40 billion in sales, or about a quarter of the total market. This growth comes from the expansion of AI infrastructure, which needs many central processing units in addition to the GPU hardware that has been in the spotlight.

The foundry business is the more unexpected part of BofA’s argument. Last year, many saw Intel’s contract manufacturing as struggling, but BofA says it is now making steady progress. The firm points out that Intel is in talks with Apple and Elon Musk’s Terafab, and deals with either would be a strong sign of success if finalized.

Ownership data supports the upgrade. Even though Intel is one of the biggest semiconductor companies by market value, only 16% of major funds own the stock, making it the second-least-owned semiconductor in the S&P 500 after SanDisk. That number rose by 3% from last month. BofA says that if more funds start buying, even a little, it could push the price up further.

There are still risks to this outlook. Intel faces growing competition from Arm Holdings in the server CPU market, and a slowdown in AI infrastructure spending could lower demand for its processors.