Intel Finally Sees AI Dividend? Stock Hits Two-Year High, Analysts Set $60 Price Target.

TradingKey - Intel Shares rose 7.3% on Tuesday, hitting a nearly two-year high.

The rally was primarily driven by a bullish research report released by KeyBanc Capital Markets on January 13, in which the investment bank upgraded Intel's rating to "Overweight" and set a $60 price target, representing an upside of more than 35% from the price on the day of publication .

Behind KeyBanc's optimistic assessment is a comprehensive bullish outlook on Intel's AI business progress and advanced process mass production capabilities.

The firm's analyst John Vinh noted that Intel's next-generation CPU products for the server market in 2026 are already nearly sold out, particularly as hyperscale tech customers like AWS, Google, and Meta continue to ramp up AI computing infrastructure, driving demand for Intel's processors far beyond expectations.

Strong downstream demand could also prompt Intel to raise prices. He expects Intel could hike server processor pricing by 10% to 15%, further expanding the potential for revenue and margin recovery.

Notably, if 2024-2025 is the era of the GPU, 2026 is viewed by many analysts as a key turning point for the CPU's "comeback." The popularization of AI inference models has significantly increased reliance on CPUs for scenarios such as data preprocessing and task scheduling, leading to a "repricing" of the CPU market's importance.

Vinh specifically pointed out that the company's yield on its latest 18A process node (near 2nm) has improved to over 60%. This level is not only sufficient to support stable mass production of the Core Ultra 3 series (codenamed Panther Lake) processors but also indicates that Intel is gradually approaching mainstream levels in the advanced process field.

Although Intel's current yield remains lower than TSMC's comparable node (around 70%-80% for the 2nm process), it is already far higher than Samsung Electronics' industry performance of less than 40%.

Consequently, KeyBanc believes Intel is poised to surpass Samsung and leapfrog to become the world's second-largest foundry service provider.

Beyond chip manufacturing, Intel's advanced packaging technology is also gaining industry recognition. KeyBanc noted that cloud service giants such as AWS, Meta, and Google have begun testing Intel's Embedded Multi-die Interconnect Bridge technology (EMIB-T) as a packaging solution for their self-developed AI chips.

While Vinh also admitted that Intel's AI positioning is still in its early stages and the overall ecosystem is still being refined, its continued progress in critical areas like packaging technology could serve as a significant catalyst for a valuation rerating.

Intel's Foundry Leap

In years of intense competition within the semiconductor industry, Intel once lost its manufacturing lead, seeing its market share gradually eroded. Facing the strong rise of AMD and Arm in the high-performance and mobile chip markets, Intel's traditional leadership was severely challenged.

At the same time, its foundry platform, Intel Foundry Services (IFS), fell into a trust crisis due to early process delivery delays and poor technical stability, leading many potential large customers to eventually choose other foundries.

Although companies like NVIDIA and Broadcom have evaluated the suitability of Intel's 18A process, these did not translate into actual mass-production orders, further heightening external doubts about the viability of its foundry business.

Now, however, the situation is quietly changing. Intel's foundry business is gradually breaking the vicious cycle of "falling behind in manufacturing — insufficient capacity — difficulty securing orders."

Supply chain sources have confirmed that Intel has successfully secured Apple's foundry orders for Mac and iPad chips, which will be mass-produced based on its 18A process node. Given Apple's consistently high standards for process yield and delivery quality, this partnership is undoubtedly seen as a major market endorsement of Intel's advanced manufacturing capabilities.

More critically, reports suggest Intel and Apple are in deep negotiations regarding the next-generation 14A process, aiming for mass production of entry-level iPhone chips by 2029. If the collaboration proceeds smoothly, Intel will enter Apple's core supply chain across multiple dimensions, further enhancing its ability to compete with TSMC and Samsung in the foundry sector.

AMD Also Benefits

In addition to Intel, KeyBanc also upgraded AMD 's rating and price target, setting its target price at $270, after which AMD's stock rose 6% on Tuesday.

Analysts believe AMD is capturing the high-end market outside of NVIDIA with its MI355 and MI455 series AI accelerators, with its AI revenue target expected to exceed $14 billion to $15 billion by 2026.

In terms of server CPUs, AMD's next-generation Turin platform is being actively deployed by major cloud service providers, with the business expected to grow by as much as 50% in 2026. AMD stands in sharp contrast to Intel: the former focuses on AI acceleration and product performance iteration, while the latter is mounting a comeback through advanced processes and its foundry business.

Currently, both companies' server CPU capacity for 2026 is nearing full utilization, and strong seller's market signals have reshaped the industry's original competitive landscape. When the reality of "tight capacity" intersects with the trend of "returning pricing power," we may be seeing more than just the return of two chip giants, but the quiet formation of a new industrial landscape.