After falling nearly 40%, J.P. Morgan raised Intel (INTC.US) to a “neutral” rating: AI computing power demand became the key to recovery

The Zhitong Finance App learned that J.P. Morgan upgraded the stock rating of Intel (INTC.US) from “reduced holdings” to “neutral” on the grounds that CEO Chen Liwu improved at the executive level after taking office, and that the increase in demand for AI computing is expected to support profit growth.

Analyst Haran Suhr said, “Despite short-term concerns about the sustainability of AI infrastructure spending, we believe that the increase in intelligent AI workloads (CPU-intensive) and the extremely tight supply of leading-process chips should continue to drive up earnings per share expectations in the upcoming earnings season and even the 2027 fiscal year (our forecast for earnings per share for FY2028 is about 15% higher than the market's agreed expectations).”

Intel's stock price is already down about 36% from its June high, while similar companies are down 20% to 25%. This brought the stock closer to J.P. Morgan's target price of $85, and its “risk-reward ratio is also more balanced.”

Before the US stock market on Monday, Intel's stock price rose 4% to $93.27; the stock closed down 6% to $89.85 last Friday.

Intel's stock is currently around 25 times its 2028 earnings per share forecast ($3.60), while similar companies have price-earnings ratios of around 24 times.

According to J.P. Morgan Chase, since Chen Liwu became CEO, Intel has made progress in core client and data center computing businesses, as well as in manufacturing yield, process technology, and advanced packaging.

Intel may need to raise additional capital, and management has warned that free cash flow will still be under pressure in 2027. However, J.P. Morgan said that the risk of further drastic dilution of shareholders' rights is increasingly reflected in stock prices.

According to J.P. Morgan Chase, Intel's transformation will take years. Intel's foundry business is still small compared to industry leader TSM.US (TSM.US). Its annualized external foundry revenue for the first half of 2026 is still less than $1 billion, while TSMC's annualized revenue is about $150 billion.