Intel stock jumps on BofA upgrade as AI demand fuels growth outlook

Intel shares INTC surged 4% in premarket trading after Bank of America upgraded the semiconductor company to Buy from Underperform and raised its price target to $135 from $96.

The brokerage cited growing demand for central processing units (CPUs) and Intel's positioning to benefit from the rise of agentic artificial intelligence.

The upgrade comes as analysts increasingly focus on the role of CPUs in supporting next-generation AI systems, alongside the continued expansion of advanced semiconductor manufacturing and packaging technologies.

BofA raises server CPU market forecast

Following discussions with industry executives and customers at the BofA Global Tech Conference, the brokerage increased its estimate for the global server CPU market to more than $170 billion, up from a previous forecast of $125 billion.

The revised outlook implies nearly five-fold growth and a 37% compound annual growth rate (CAGR) between 2025 and 2030.

According to BofA, the emergence of agentic AI systems capable of carrying out complex tasks with limited human input is expected to create substantial opportunities for both traditional x86 chipmakers and companies developing ARM-based processors.

As part of its revised outlook, the firm also increased its price target on AMD to $560 from $500, implying nearly 24% upside from Wednesday's closing price.

Alphabet order highlights Intel foundry progress

Separate industry developments have added to optimism surrounding Intel's long-term strategy.

A significant commitment from Alphabet's recent plans to manufacture Tensor Processing Units through Intel Foundry.

The plan is being viewed as a major validation of Intel's efforts to expand its contract manufacturing business.

According to The Information report, Alphabet has committed to a three-million-unit TPU order for 2028, representing an estimated 50% of Google's projected TPU output for that year.

The decision appears to be driven by both technology and supply chain considerations.

Intel's Embedded Multi-die Interconnect Bridge (EMIB) packaging technology has reportedly achieved yield rates above 90%, positioning it as an alternative to Taiwan Semiconductor Manufacturing's CoWoS packaging platform, which faces capacity constraints amid strong AI-related demand.

Google's Gemini AI platform now serves more than 900 million monthly active users, increasing the company's need for computing capacity and manufacturing diversification.

Foundry momentum and execution risks remain key

Industry interest in Intel's foundry business appears to be expanding beyond Alphabet.

Nvidia is evaluating Intel's 18A process node for a future multi-die graphics processor, while Tesla has committed to Intel's 14A process technology for custom silicon used in its Terafab AI computing complex in Austin.

These developments are occurring amid broader efforts by US technology companies to reduce supply chain dependence on Taiwan and increase domestic semiconductor production.

Despite the positive developments, execution remains a central consideration for investors.

Intel must successfully deliver its process technology roadmap and manufacturing capabilities at scale to convert potential opportunities into sustained revenue growth.

Recent financial results have also supported the bullish narrative.

Intel reported first-quarter 2026 revenue of $13.58 billion, exceeding consensus estimates by more than $1.1 billion, with strength in its Data Center and AI division contributing to the outperformance.

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