This is largely thanks to Agentic AI. Intel shares surged 27% in pre-market trading on Friday, as competitors...AMDandArmThe increase was approximately 10%.
Intel expects second-quarter revenue of $13.8 billion to $14.8 billion, with the median forecast range of $14.3 billion significantly higher than the average analyst expectation of $13 billion. Adjusted earnings per share for the second quarter are expected to be $0.20, also significantly higher than the average analyst expectation of $0.09; The gross profit margin for the second quarter is expected to be 39%.
In a report to clients, Wedbush Securities analyst Matt Bryson wrote: "Management implies that even with exceptionally strong sales performance, clients' computing needs (primarily server CPUs) remain unmet, with the shortfall measured in billions."
While Bryson has reservations about Intel's view that "consumer PC manufacturers will rebuild inventory," he does believe that Intel is the best candidate to "serve the unexpected growth in demand for server CPUs driven by inference loads and agent AI," given its ability to expand the supply of in-house wafer fabs.
Bryson added, "Conversely, this backdrop leads us to believe that the business improvements Intel enjoyed in the first and second quarters are sustainable," following the earnings release.Bryson maintained its "neutral" rating on Intel but raised its price target from $30 to $60.
JeffreyAnalyst Brian Curtis also noted the boom in intelligent agent AI, but he suggested that this boom may temporarily mask other problems within the company led by Chen Liwu.
In his report, Curtis wrote: “The surge in XPU usage is driving real server CPU demand. Intel pointed out that server shipments recorded double-digit growth and that this growth momentum will extend into 2027, but AMD’s growth may be even better. The PC business appears to be weakening, with management ‘cautiously planning’ for weak PC demand in the second half of the year and pointing out that the total target market (TAM) for full-year PC unit shipments will see a low double-digit decline.”
Curtis continued, “We still believe AMD is in a more advantageous position in the server market, and the gap is expected to widen further with the debut of the Venice (2nm) architecture in the second half of 2026 or the first half of 2027. During this period, Intel remains a clear beneficiary of the structural demand backdrop, and we expect the supply and demand imbalance to firmly favor the company for the foreseeable future.”
Curtis also maintained his "hold" rating on Intel, but raised his price target from $40 to $60.
Morgan StanleyAnalyst Joseph Moore expressed a similar view, predicting that strong demand for CPUs will continue as the shortage "may persist for some time." However, he expressed caution about Intel's position.
Moore wrote: "CPUs are clearly more important for agent load, but we disagree with the so-called 'simple algorithm' of CPU-to-GPU ratios. Intel talks about the GPU-to-CPU ratio in historical clusters changing from 8:1 to 4:1 or even lower—but this number is incorrect because every two GPUs in the Bianca card have a head node CPU, plus a host node."
"This is also somewhat misleading, because the vast majority of Intel CPUs are not in AI data centers, so the growth of AI is only used for a relatively small portion of its shipments. There is also pressure for market share:"NVIDIAShifting some CPU racks from Intel to Vera; Trainium is moving head nodes from Intel to ARM; Both TPU and Trainium are migrating host nodes from x86 to ARM. AMD clearly prefers its own CPUs. Therefore, most important CPUs in the AI field are facing headwinds of declining market share. Intel does own wafer fabs, which makes sense during times of shortage, but AMD may make it clear that they can obtain more wafers if needed; We certainly don't think AMD will lose market share in the medium term.
Moore gave Intel a "hold" rating but raised his price target from $56 to $73.
