TLDR
- Intel stock fell 2.6% Wednesday after hotter-than-expected wholesale inflation data rattled chip stocks
- April PPI rose 1.4% month-over-month, the highest 12-month pace since December 2022, reducing rate-cut hopes
- Bank of America raised its Intel price target to $96 from $56 but kept its underperform (sell) rating
- Intel and Apple reached a preliminary deal for Intel to manufacture chips for Apple devices
- BofA estimates the Apple deal could represent a $35–$40 billion addressable opportunity, though meaningful volume may not arrive until 2028 or later
Intel (INTC) stock was down 2.6% in early Wednesday trading after a hot inflation reading pulled the rug out from under a chip-stock rally that had been building for months.
The April Producer Price Index came in with a 1.4% month-over-month jump — the highest 12-month wholesale inflation pace since December 2022. That spooked investors across the semiconductor sector.
Advanced Micro Devices (AMD) fell 3.1%. Qualcomm (QCOM) dropped 1.3%, a day after tumbling 11%. All three had been rising in premarket before the data hit.
The concern is straightforward: higher PPI feeds into the Fed’s preferred inflation measure, the PCE index. Hotter inflation means fewer rate cuts, which could dampen AI infrastructure spending — and chip demand along with it.
Intel’s stock has had a remarkable run. It closed May 11 at $129.44, up 93.8% since April 23, when the company posted Q1 earnings that beat expectations. For context, the S&P 500 (SPY) gained about 4.3% over the same period.
That earnings beat came with a catch though. Intel reported a net loss of $4.3 billion in Q1. The foundry business lost $2.4 billion in Q1 2026, nearly identical to the $2.3 billion lost in Q1 2025.
Bank of America Raises Target, Keeps Sell Rating
Bank of America analyst Vivek Arya raised Intel’s price target to $96 from $56 following news of a preliminary deal between Intel and Apple for Intel to manufacture chips used in Apple devices.
Despite the target hike, Arya kept an underperform (sell) rating on the stock. The key reason: even if a formal deal lands tomorrow, it likely requires another two to three years for capex buildout, qualification, and production ramp. Meaningful volume may not begin until 2028 or later.
BofA estimates the Apple opportunity at $35–$40 billion or more in addressable revenue, with Intel potentially capturing around 25% — or $10 billion-plus per year over time. But analysts said they are not factoring any of that into their current model yet.
They also flagged that ramping up foundry capacity for Apple would be initially gross-margin dilutive, which could push Intel’s foundry operating margin breakeven target — currently guided for 2027 — back by another one to two years.
What’s Driving the Rally
Beyond Apple, a few other developments have fueled the INTC run. Intel repurchased Apollo’s equity stake in the joint venture tied to its Fab 34 in Ireland. It also announced plans to join Elon Musk’s Terafab project and signed a multiyear deal with Google to build AI and cloud infrastructure.
The risk that looms largest for Intel’s foundry ambitions is manufacturing yield. Its advanced 18A node hasn’t yet hit yields competitive with TSMC or Samsung, and Intel executives gave reassuring words but no specific numbers on the earnings call.
BofA’s downside risks include slower-than-expected 18A ramps, lack of major external foundry customers, and continued share loss in the PC processor market.
Intel stock sat at $129.44 as of May 11 close, more than 34% above BofA’s new $96 price target.
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