According to Woofun AI, Intel (INTC.US) stock closed at $89.85 on October 16, a gap of only about 5% from JPMorgan Chase (JPM.US)'s target price of $85 for December 2027. Based on this trend of valuation convergence, JPMorgan Chase (JPM.US) released a report on October 18, 2026, which raised the Intel (INTC.US) rating from “reduced holdings” to “neutral.”
This adjustment is not about being bullish, but rather judging that most of the long-standing bearish deals against Intel (INTC.US) have been fulfilled, and the risk and return are currently in balance. The core logic is that despite structural improvements in the company's fundamentals, the evidence of the rise has not yet been fully collected, and the market still needs to wait patiently for key verification points to be implemented.
Judging from business execution and valuation restructuring, Intel (INTC.US) is experiencing a profound shift in profit pools. The Data Center and Artificial Intelligence Division (DCAI) achieved an operating profit of 2.5 billion US dollars in 2Q26, surpassing the client business for the first time and becoming the company's largest source of profit.
According to data compiled by Woofun AI, demand for Granite Rapids servers is extremely tight, and long-term agreements from Google (GOOGL.US) and other customers extend visibility until 2027; at the same time, AI PCs already account for two-thirds of the client portfolio, driving ASP and product portfolio optimization. On the manufacturing side, 18A-P entered risky production, 14A locked in high volume production in 2028, the 0.9 process design kit landed in October, and the backlog of EMIB-T advanced packaging orders climbed towards 2027.
Additionally, ASIC services have annualized revenue of nearly $2 billion, an increase of about 3 times year over year, and the path points to $4 billion, using a combination of in-house manufacturing and IP to provide custom chips to hyperscale manufacturers. On the valuation side, Intel (INTC.US) is currently trading at about 25 times the 2028 earnings of $3.60 per share, which is the same as 24 times that of the sector. Previously, the relative premium had been narrowed by sell-off. Dilution pressure was also priced: the number of tradable shares increased from 4.4 billion to 5.1 billion shares, covering 9.9% equity conversion by the US government, Nvidia (NVDA.US) $5 billion investment ($23.28 per share), and SoftBank's $2 billion placement, with cumulative financing of approximately $20 billion. Since being downgraded to holdings reduction in November 2022, SMH (SMH.US), SOX, Broadcom (AVGO.US), and AMD (AMD.US) have outperformed Intel (INTC.US) by 65%, 37%, 115%, and 148% respectively, while Intel (INTC.US) has retracted 36% since its peak in June, and the semiconductor sector has retracted 20% to 25% over the same period, narrowing the bearish space significantly.
However, shortcomings in the OEM business and capital constraints are still the key to limiting the rise in valuation. The annual revenue of external foundry is only about 1 billion US dollars, which is two orders of magnitude different from TSM.US (TSM.US)'s scale of 150 billion US dollars. Although there has been progress in yield and contact with new customers, the scale is still small, and it is necessary to name anchor customers and verify the economy of cutting-edge nodes to become the fulcrum of valuation. Management suggests that free cash flow in 2027 is 'more challenging' and may re-enter the capital market. The risk of incremental dilution is partially priced but not gone away.
JPMorgan Chase (JPM.US) pointed out that the rating increase mainly responds to room for decline, and the rise requires verification of four key points: one is the implementation of the data center CPU roadmap and response to AMD (AMD.US) Turin, Venice, and Verano competition to determine the DCAI profit margin trajectory; the second is the overall AI computing strategy, including the Crescent Island GPU (recently renamed 'D-Series') slope climbing and AI ASIC and inference accelerator design disclosure; third, external foundry Customer landing; fourth, data center network capacity enhancement, strengthening the fastest growth layer in the AI stack through organic growth or mergers and acquisitions.
In terms of earnings forecasts, earnings of $3.60 per share in 2028 were about 15% higher than market consensus. Upside risks include faster CPU execution, OEM customer landing, and ASIC bid acceleration; downside risks involved next-gen node delays, memory-driven BOM inflation dragging down PC demand, and AMD (AMD.US) continuing to grab share on clients and servers.
Currently, the market is in a transition period between the end of bearish trading and the lack of bullish evidence. The neutral rating reflects this reality: risk is well priced, but an upward catalyst is yet to be seen. Investors need to pay attention to verification points such as foundry anchoring customer landing, AI computing strategy execution, and network capability enhancement. These variables will determine whether Intel (INTC.US) can shift from defensive valuation to a growth narrative. Following a sharp pullback in 2022, Intel (INTC.US) is once again facing a directional choice, and the market needs to patiently observe the results of its transformation.