Intel Corporation (NASDAQ:INTC) stock advanced 0.57% on Thursday amid ongoing debate over how to value the company after a sharp run-up in its market capitalization. Bank of America analysts raised their price objective to $48 while simultaneously flagging concerns about whether the recent surge in the company’s market value is justified.
In their update, BofA pointed to tangible improvements in Intel’s opportunity set, particularly in the server CPU segment, alongside earnings accretion tied to recent fabrication buy-outs. Those constructive developments informed the firm’s decision to lift its target, which it set using a 3.7x CY28E EV/S multiple compared with 3.5x CY27E. The new target sits toward the high end of Intel’s historical EV/S trading range of 1.7x-4x.
The analysts laid out a sum-of-parts valuation approach for Intel. Within that framework, BofA cautioned that any external manufacturing business - whether for wafers or packaging - should not be valued above roughly the 10x EV/S multiple observed for the industry leader Taiwan Semiconductor Manufacturing Company. Based on their modeling assumptions, BofA projects $3 billion in external manufacturing and packaging revenue for CY27 and $6 billion for CY28, driven by MediaTek TPU packaging, Apple M processors and other ASIC customers.
"We like INTC’s improving opportunity in server CPU, EPS accretion from recent fab buy-out and scarcity value of its manufacturing & packaging assets for external customers. However, the ~$110bn market cap increase over the last 3 months seems excessive to us," BofA analysts commented.
BofA also expressed skepticism about the longer-term benefits Intel might realize from its association with Tesla’s Terafab initiative. The bank suggested that beyond intellectual property sharing and packaging work, it is unclear whether the partnership will deliver durable advantages to Intel - in part because Tesla is assembling its own competing fabrication capability and already works with other foundries, including Samsung and TSMC.
On the earnings front, BofA indicated that Intel’s core products business could plausibly generate $2.00 to $2.50 in earnings per share. However, the analysts recommended valuing that core business no higher than about 16x CY28E price-to-earnings - a multiple consistent with a set of profitable fabless peers referenced by the firm, including Advanced Micro Devices, Broadcom and Nvidia.
Overall, the update combines constructive notes on product and manufacturing traction with a conservative valuation posture, reflecting BofA’s view that recent market moves may have priced in more than the analysts are willing to assume.
Clear summary
BofA raised Intel's price objective to $48 on improving server CPU prospects and EPS accretion from fab buy-outs, while warning the roughly $110 billion market-cap gain over three months may be excessive. The bank provided a sum-of-parts valuation, capped external manufacturing multiples near the industry leader's level, and modeled $3 billion and $6 billion in CY27 and CY28 revenue from packaging and foundry work.