Intel Corporation (INTC) shares experienced a surge in early trading on Tuesday, fueled by the announcement of a significant multi-billion-dollar deal with Amazon.com Inc.’s (AMZN) cloud computing division, Amazon Web Services (AWS), and the receipt of a substantial U.S. semiconductor grant.
Analyst Vivek Arya, while maintaining an ‘Underperform’ rating and a price target of $21, acknowledged the positive aspects of the AWS collaboration and government funding. He highlighted that Intel’s custom AI fabric chip and custom Xeon server CPU chip collaboration with AWS is impressive, but emphasized that Intel has been supplying AWS with CPUs for a considerable time, making customization a familiar process. Arya also stated that the AI fabric (networking) win on 18A is likely to have a significant impact only from the end of calendar year 2026. He cautioned that Intel faces stiff competition in the Ethernet switch market from established players like Broadcom Inc. (AVGO). Arya stressed that Intel’s ability to execute on its next-generation 18A manufacturing node is crucial for its future as a leading-edge manufacturing entity.
In a more optimistic outlook, analyst Gus Richard maintained an ‘Outperform’ rating and a price target of $42. He emphasized the significance of Intel’s $3.5 billion deal to manufacture chips for the U.S. military, including a $3 billion award for Secure Enclave. Richard highlighted that Intel is the sole alternative to Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) for advanced logic chips used by the U.S. military, due to the Department of Defense’s requirement for chips to be manufactured within the U.S. He also noted the co-investment in custom chip designs between AWS and Intel, spanning multiple years and billions of dollars, covering products and wafers from Intel. Richard expressed confidence in the potential for continued government funding for Intel.
Analyst John Vinh, while reaffirming a ‘Sector Weight’ rating, focused on Intel’s $10 billion cost savings plan and the updates provided. He stated that Intel is expected to have completed more than half of its targeted 15,000 employee reduction by the end of the year, along with reducing or exiting two-thirds of its global real estate by year-end. Vinh expressed encouragement regarding Intel’s proactive approach to cost management and commended the company’s initiative to make its Intel Foundry Services (IFS) an independent subsidiary.
Intel’s stock price surged by 6.12% to $22.19 at the time of publication on Tuesday. The company’s strategic partnerships, government support, and cost-cutting measures have instilled a sense of optimism among some investors, although others remain cautious.
