One of the biggest problems facing chip stock Intel (INTC) right now is a lack of clients for its foundry operations and its new production nodes, particularly 18A. Recently, good news came out that suggests a new client may be on the hook for some 18A produce, and that was enough to give investors a bit of a boost. Intel shares gained modestly in Friday afternoon’s trading.
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While the exact identity of the client is unknown, new reports suggest that Microsoft (MSFT) is Intel’s major new volume client. The reports suggest that Microsoft was looking for someone to produce the Maia series of AI accelerator chips, which are custom-designed and meant for use in Azure cloud infrastructure.
This actually lines up with a report from all the way back in February 2024, when Intel revealed that Microsoft was a “marquee customer” for advanced semiconductor manufacture with the 18A process. Intel brought this news forward at a Foundry Direct event, though it did not offer specific details about the chip it would be working on at the time. But if it does turn out that Microsoft is the big new client, then Intel might have just answered every concern about the foundry process.
Not Everyone Is So Convinced
This news came out at a great time for Intel, though not quickly enough to answer concerns from the analyst community. In fact, HSBC analyst Frank Lee—who has a four-star rating on TipRanks—just pared back Intel’s rating, though Lee also hiked the price target in something of an unexpected move.
Lee lowered Intel’s rating from Hold to Reduce, but hiked the price target from its original $21.25 to its current $24. Lee noted that Intel’s rally, in progress since last August, was mostly the result of the investment deals it struck with several sources. Intel’s long-term performance, meanwhile, is still very much an issue. This makes sense, at least until the news that Microsoft might be throwing its lot in with Intel is considered.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on two Buys, 24 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 61.79% rally in its share price over the past year, the average INTC price target of $28.70 per share implies 22.75% downside risk.
