And this is largely due to Agent AI. Intel shares jumped 27% in premarket trading Friday, rivalsAMDAndArmThe increase is about 10%.
Intel expects second-quarter revenue to be $13.8 billion to $14.8 billion, and the median forecast range of $14.3 billion is significantly higher than analysts' average estimate of $13 billion; It is expected to report adjusted EPS of $0.20 in the second quarter, which is also significantly higher than the average analyst estimate of $0.09; Gross profit margin is expected to be 39% in the second quarter.
Matt Bryson, an analyst at Wedbush Securities, wrote in a note to clients: "Management hinted that even with exceptionally strong sales performance, customers' computing needs (mainly server CPUs) were still unmet, and the shortfall was measured in 'billions'."
While Bryson has reservations about Intel's view that "consumer PC makers will rebuild inventory," he does believe that with its ability to expand in-house fabs supply, Intel is the best person to "serve the inferential load and the more than expected growth in demand for AI-driven server CPUs".
Bryson added, "In turn, this backdrop leads us to believe that the business improvement Intel enjoyed in the first and second quarters is sustainable,"Bryson maintained a "neutral" rating on Intel but raised its price target to $60 from $30.
JefferiesAnalyst Brian Curtis is similarly concerned about the boom in intelligent AI, but suggests that the boom may temporarily mask other problems within the company led by Chen Liwu.
Curtis wrote in the report: "The surge in XPU usage is driving real server CPU demand. Intel noted that server shipments recorded double-digit growth and the growth momentum will extend into 2027, but AMD's growth may be better. The PC business side seems to be weakening, and management has 'prudently planned' for the weakness in PC demand in the second half of the year, noting that the total target market (TAM) for PC unit shipments for the full year will see a low-double-digit decline."
Curtis continued: "We still believe AMD is in a better position in the server market, with the gap expected to widen further as the Venice (2nm) architecture debuts in the second half of 2026 or the first half of 2027. Intel remains a clear beneficiary of the structural demand backdrop during this period, and we expect the supply-demand imbalance to lean firmly in the company's favor for the foreseeable future."
Curtis likewise maintained a "hold" rating on Intel, but raised his price target to $60 from $40.
Morgan StanleySimilar sentiments were echoed by analyst Joseph Moore, who expects strong demand for CPUs to continue as the shortage "is likely to continue for some time." However, he expressed caution about Intel's position.
Moore wrote: "CPU is obviously more important for agent load, but we don't agree with the so-called 'simple algorithm' of CPU-to-GPU ratio. Intel talked about the GPU-to-CPU ratio in historical clusters changing from 8:1 to 4:1 or even lower-but this number is wrong because Bianca cards have a head node CPU for every two GPUs, plus a host node."
"This is also a bit misleading because the vast majority of Intel CPUs are not in AI data centers, so the growth of AI only acts on a relatively small portion of its shipments. There are also market share pressures:NVIDIAIs shifting some CPU racks from Intel to Vera; Trainium is shifting head nodes from Intel to ARM; Both TPU and Trainium are moving host nodes from x86 to ARM. And AMD will obviously prefer its own CPU. As a result, most important CPUs in the AI field are facing headwinds of declining share. Intel does own fabs, which makes a lot of sense in times of shortage, but AMD may make it clear that they can get more wafers if needed; We certainly don't see AMD losing market share in the medium term. "
Moore gave Intel a "hold" rating but raised its price target to $73 from $56.
