Intel Earnings Beat Prompts Target Hike to $94.2

In a GF Overseas Electronics & Telecom report, analyst Jeff Pu raised his price target on Intel to $94.2 from $78.5 after saying the chipmaker's first-quarter results beat expectations. Revenue was $13.6 billion, $1.4 billion above the midpoint of Intel's guidance and ahead of a $12.4 billion consensus estimate, while non-GAAP gross margin was 41% versus 35% guidance and EPS was $0.29 versus break-even guidance.

Pu said Intel's second-quarter outlook was relatively conservative, calling for revenue of $13.8 billion to $14.8 billion, non-GAAP gross margin of 39% and EPS of $0.20, but argued the company's narrative is shifting toward an AI beneficiary and external foundry option. He said management indicated 18A yields were running better than internal expectations and server CPU demand had improved materially over the past 90 days, while external foundry revenue remained small at $174 million and the business posted a $2.4 billion operating loss; Pu also said Intel could win part of Tesla's AI6 orders that had previously been expected to go exclusively to Samsung.