Intel (INTC) Gains 4% on New Street Buy Upgrade

Intel shares rose 4% to $90.47 after New Street Research upgraded the stock to Buy, citing an AI-driven server CPU shortage ahead of Q3 results on October 29.

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The shares remain below the $100 threshold they last crossed in early September. On September 8 they closed at $104.47. They sit well under the 52-week high of $142.35 and far above the 52-week low of $24.05.

Why Did Intel Shares Rise on Monday?

Intel shares rose because New Street concluded that agentic AI is creating a lasting shortage of server processors. Analyst Pierre Ferragu wrote that AI is driving a sustained increase in server CPU demand, with supply constraints set to persist for years, while Intel retires weaker manufacturing nodes and adds capacity.

The move extended across the sector. AMD (AMD) gained about 3% to $532.26 and Nvidia (NVDA) added about 3% to $216.29. The iShares Semiconductor ETF (SOXX) rose about 4% to $496.02, and the Invesco QQQ Trust gained about 1% to $714.41.

What Does New Street Expect for Intel's Server Business?

New Street expects Intel's server capacity to grow by more than 50% in 2027 and its server CPU revenue to reach $50 billion by 2030. That forecast assumes Intel's share of a market above $220 billion slips to between 20% and 25%, as the pie grows faster than Intel's slice.

The $125 target applies a multiple of 25 times New Street's 2030 earnings forecast of $7.10 per share. Capacity is expected to come from the expansion of the Intel 3 process, the ramp of the 18A node, and the reallocation of manufacturing from PCs to servers. Ferragu also argued that stronger internal demand supports utilization at Intel's foundry, the contract-manufacturing arm, which reinforces the broader turnaround.

Strategic Context: Insider Buying and Capital Raising

Chief Executive Lip-Bu Tan bought 105,263 shares at $95.00 on August 11 through a family trust, a purchase of about $10 million, according to a Form 4 filing with the Securities and Exchange Commission. The price matched the one paid by public investors in Intel's concurrent $20 billion secondary offering. Tan and a family member had agreed to buy a combined $12 million of stock in the sale.

Insider purchases at the offering price are often read as a signal of management confidence. Tan's shares are now trading about 5% below his entry price.

Are More Intel Job Cuts Coming?

Further job cuts at Intel are possible but unconfirmed. Industry reports in early September said the company could reduce its workforce by another 5% to 10%, equivalent to roughly 3,750 to 7,500 positions on a base of about 75,000. Intel has not announced a new reduction or filed a new California WARN notice through the end of August.

Intel employed 82,300 people at the end of June, including 77,600 in core operations. The company has already shed about 40,000 jobs over the past two years under its restructuring. Any new cuts would arrive alongside hiring in priority areas, so the net change in headcount could be smaller than the gross figure.

What Comes Next for Intel Stock?

The next test is the company's third-quarter report, due after the market close on October 29. Consensus calls for revenue of about $16.5 billion and earnings of $0.40 per share. Some forecasters project revenue near $16.9 billion and earnings of $0.46 per share, and one has said Intel could beat revenue estimates by at least 5% on strong AI demand.

Investors will look for three things: server CPU pricing and supply commentary, the pace of 18A yields and capacity additions, and any update on headcount. Confirmation of the shortage thesis would support the upgrade. A cautious capacity outlook or a restructuring charge could cap the rebound.

Outlook

Intel's 4% gain on October 26 rests on a specific thesis: AI workloads are tightening the supply of server processors, and Intel is positioned to add capacity. The shares remain about $10 below the $100 mark and roughly a third below their 52-week peak. The October 29 earnings release will show whether demand, margins and cost discipline match the narrative.