BofA Securities downgraded Intel Corporation (NASDAQ: INTC) from Neutral to Underperform, maintaining its $34.00 price target and warning that recent share gains had already priced in most of the company’s balance sheet improvements and foundry ambitions.
The firm said Intel’s $80 billion market cap increase overstated its external foundry potential, while the company continued to face structural competitive disadvantages, including a lack of a defined AI strategy and an uncompetitive server CPU portfolio.
BofA argued that Intel’s foundry business had been mischaracterized, noting that the company still relied on Taiwan Semiconductor Manufacturing Co. (TSMC) for around 30% of its production. Analysts expressed skepticism about the cost and yield outlook for Intel’s upcoming 18A and future 14A manufacturing processes.
They also noted that U.S. government pressure could force Intel to maintain unprofitable manufacturing operations, reducing flexibility for divestitures. BofA reiterated that Intel’s valuation should be assessed based on total company earnings rather than a sum-of-parts approach, as there were no catalysts supporting a structural separation.
