Goldman Sachs Initiates Coverage on Intel: $150 Target Price, Neutral Rating
N.R. Finch
Goldman Sachs initiated coverage of Intel with a $150 price target but only a Neutral rating — acknowledging upside in server CPUs and foundry, yet arguing the stock already prices in most of the improvement, leaving little margin of safety for new buyers.
How does Goldman get to $150?
Goldman applies a 30× multiple to $5 in normalized non-GAAP EPS — a steady-state earnings figure Intel has not yet reached.
This means → the target is anchored to 2028 or beyond, not next year's numbers.
Goldman's EPS path: ~$1.05 in 2026 → ~$1.75 in 2027 → ~$3.35 in 2028 — still well short of the $5 assumption.
In plain terms = Goldman drew a map with a good destination but concedes the journey is long — hence Neutral, not Buy.
Server CPU recovery — can Intel keep all the upside?
Intel's data-center unit (DCAI) posted 22% year-over-year revenue growth in Q1 2026; Q2 guidance points to continued sequential gains.
Goldman argues that in the agentic-AI era, CPUs handle inference scheduling, enterprise workflows, and data orchestration — creating a structural uplift in server CPU demand, not just a cyclical bounce.
But the CPU dividend is not Intel's alone: AMD retains a stronger mid-term product roadmap, and Arm keeps gaining share in cloud providers' custom chips.
This reflects a broader picture: Intel's server-CPU recovery is real, but the share fight is far from over.
Foundry in two layers — which one pays first?
Advanced packaging leads: Intel holds EMIB, Foveros, and related technologies — processes that bond multiple chips together like building blocks. Goldman projects external advanced-packaging revenue rising from ~$500 million in 2026 to ~$10.1 billion by 2030.
External wafer foundry is a longer-dated option: projected at ~$2.7 billion in 2028, growing to ~$11 billion by 2030. A meaningful P&L impact likely arrives after 2028.
This means → the near-term cash story is packaging; wafer foundry is more of a deferred claim.
Intel's own 10-Q risk disclosure warns: if the 14A node — Intel's next-next-generation process — fails to secure enough customer and internal design wins, subsequent node plans may need adjustment.
Why is gross margin the real swing factor?
Goldman treats gross margin recovery to above 50% as the valuation pivot — more important than top-line scale.
The bull case requires foundry and server CPUs to deliver simultaneously; the bear case still shows revenue, but multiples and margins both compress.
In plain terms = Intel has no shortage of "revenue stories" — what it lacks is proof it can keep enough of each dollar earned.
Why is HSBC more bullish than Goldman?
HSBC raised its Intel target from $50 to $95 with a Buy rating, arguing the market underestimates 2026–2027 DCAI revenue and margin elasticity.
HSBC stated explicitly: "Server CPUs are a bigger near-term catalyst than foundry."
This reflects a core disagreement: Goldman sees the end-state already priced in; HSBC sees near-term improvements still under-appreciated.
What should investors watch next?
Whether Intel can deliver quarter by quarter on five fronts will determine if the long-term EPS behind the $150 target holds:
① Sustained DCAI revenue growth → ② 18A process yields on track → ③ 14A wins external design commitments → ④ EMIB-T — Intel's next-gen bridge-packaging technology — lands customers → ⑤ Foundry losses narrow.
This means → a stumble on any single front turns the $5 long-term EPS into a paper number; deliver on all five, and $150 may actually prove conservative.
Content is for reference only, not financial advice.