Intel's (INTC) decision to raise roughly $20 billion through an equity offering might look like a defensive move to shore up its balance sheet. But Bank of America sees it differently: as a confident bet on the company's foundry turnaround.
Analyst Vivek Arya reiterated a Buy rating on Intel, though he trimmed the price target to $145 from $160. That still implies about 48% upside from the stock's Aug. 11 close of $97.71. The lower target reflects modest earnings dilution from the offering and a recent re-rating among AI computing peers.
Capital Raise Signals Foundry Confidence
The offering could dilute earnings per share by about 4% to 5% due to the higher share count. But Arya argues the deal signals growing management confidence in both internal demand and external foundry customer engagement. He also points to Intel's higher capital spending and progress on its 14A manufacturing process. Additional external customer wins involving 18A-P, 14A, and advanced packaging could drive further spending.
Bank of America expects longer-term foundry scale and improved operating efficiency to outweigh the near-term dilution.
Intel Could Target $380 Billion Foundry Market
The analyst sees a substantial long-term opportunity for Intel's manufacturing business. Bank of America estimates Intel could eventually capture about 8% to 10% of a roughly $380 billion wafer foundry market by 2030. It could also address about 25% to 30% of an estimated $20 billion market for advanced 2.5D and 3D packaging.
The firm sees Intel generating earnings power of more than $6 per share by 2030. Its model calls for Intel Foundry revenue to rise from about $1.1 billion in 2026 to nearly $40 billion in 2030. Potential foundry opportunities include Apple silicon wafers, MediaTek packaging, Terafab, and ARM-based server processors, though Bank of America said it has not incorporated specific potential deals into its base-case foundry model.
Server Business Adds To Bull Case
Intel's server processor business is another key part of the analyst's bullish view. Intel server average selling prices rose 43% year over year to a record of roughly $1,200 in the second quarter, according to Mercury data cited by Bank of America. The firm sees potential for double-digit unit and ASP growth through 2030 as the server market expands.
Bank of America projects Intel's server CPU sales could reach about $45 billion by 2030, representing roughly 20% of an estimated $220 billion addressable market.
The firm lowered its 2026, 2027, and 2028 earnings estimates by 2%, 4%, and 3%, respectively, to account for the higher share count. It now expects adjusted earnings of $1.47 per share in 2026, $2.01 in 2027, and $2.92 in 2028.
Key risks include execution and yields on Intel's 18A and 14A processes, the pace of securing major external foundry customers, and further market-share losses to CPU rivals.
INTC Price Action: Intel shares were up 3.18% at $100.81 at the time of publication on Wednesday, according to market data.
