TLDR
- Bank of America raised its Intel price target to $96 from $56 but kept its Underperform rating
- The Wall Street Journal reported Apple and Intel reached a preliminary chip manufacturing agreement
- Intel stock jumped 14% Friday to a record close of $124.92, up ~240% year-to-date
- BofA estimates the Apple deal could bring Intel ~$10B in annual foundry sales by 2030
- An Intel executive VP sold $4M worth of stock at an average price of $99.53 before the rally
Intel (INTC) stock hit a new all-time high on Friday after The Wall Street Journal reported that Apple and Intel have reached a preliminary agreement for Intel to manufacture chips for Apple devices. The stock closed at $124.92, a 14% single-day jump, bringing its year-to-date gain to roughly 240%.
Bank of America responded by raising its Intel price target — from $56 to $96 — but kept its Underperform rating on the stock. The bank’s analysts believe the upside from the Apple deal is already priced in.
BofA estimates the deal could eventually generate around $10 billion in annual foundry sales for Intel by 2030, based on Intel capturing roughly 25% of Apple’s chip volumes. That’s a meaningful number, but analysts say it comes with strings attached.
In the near term, M-Series chips for MacBooks and iPads are seen as the likely starting point. A-Series chips for iPhones could follow over time, but that’s further down the road.
BofA has not added the Apple deal to its formal financial model yet, citing a lack of clarity on the terms. The bank also flagged a two-to-three year timeline for capital spending, qualification, and production ramp-up.
Margins Under Pressure Early On
Gross margins are expected to take a hit in the early stages. Depreciation, low yields, and startup costs will weigh on profitability. Intel’s goal of reaching foundry operating breakeven by 2027 could slip by one to two years, according to BofA’s analysts.
“We reiterate Underperform as we believe these upsides are already fully valued,” the analysts wrote. They added that AMD and ARM are better positioned to gain from the growing server CPU market, which BofA now projects will reach $120 billion by 2030, up from a prior estimate of $80 billion.
The price target increase was driven by a new sum-of-parts valuation framework and the upgraded server CPU market outlook — not the Apple deal itself.
Insider Selling Raises an Eyebrow
Away from the deal news, there’s a detail worth flagging. Executive VP April Miller Boise sold approximately $4 million worth of Intel stock at an average price of $99.53 — a 28% reduction in her holding. This was the largest insider sale at Intel in the past twelve months.
The sale happened at a price well below Friday’s close of $124.92. While insider selling can happen for many reasons, it is generally viewed as a cautious signal — particularly when the sale price is below where the stock ends up trading.
Intel insiders collectively own about 0.08% of the company, currently valued at around $483 million. No insider has purchased Intel stock in the past three months.
As of Monday pre-market, Intel was trading at $130.80, up another 4.71% from Friday’s record close.
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