Key insights
- Melius Research analyst Ben Reitzes reiterated a Buy rating on Intel (INTC) with a $165 price target, suggesting shares could rally over 100% from current levels. The analyst cited the increasing value of Intel's foundry business, driven by AI demand and a push for domestic chip production, as a key factor. Reitzes believes the foundry and product businesses could each be worth over $80, and envisions a potential spin-off of the foundry unit as a "US Foundry National Champion" around 2030. Strategic backers, including the U.S. government and Nvidia (NVDA), were also noted.
Investing.com -- In a note to clients on Wednesday, Melius Research made the case that Intel shares could roughly double from current levels, arguing the chipmaker's foundry business is becoming increasingly valuable amid an AI-driven scramble for domestic chip production.
Analyst Ben Reitzes reiterated a Buy rating and two-year price target of $165, but said "even $200 over 2 years is on the table," implying more than 100% upside from its current price above $97, as he weighed a sum-of-the-parts valuation.
Intel shares are up roughly 160% this year, outpacing both AMD and the broader semiconductor sector.
Reitzes said the recent $20 billion stock sale to fund Intel's foundry ambitions, at $95 a share, was a sign of management's conviction rather than a reason to trim his target.
"The AI 'puck' has skated toward Intel's foundry asset, in addition to CPUs in general," he wrote, arguing the foundry and product businesses could each be worth well over $80.
The analyst framed Intel's foundry, spanning intellectual property, engineers, facilities and manufacturing, as critical to U.S. national security given the concentration of advanced chip production in Taiwan.
He suggested the unit could eventually be spun off around 2030 as a "US Foundry National Champion."
Reitzes pointed to a roster of strategic backers, including the U.S. government, Nvidia and SoftBank, and said fears that President Trump could sell part of the government's stake were overdone.
His $165 target reflects a 15% to 20% discount to a $200 sum-of-the-parts valuation.