Despite Intel’s stock surge following Thursday’s announcement that Nvidia would invest in the company, Citi analysts downgraded Intel’s stock rating to “sell” from “neutral” in a Friday report, while raising their price target from $24 to $29 per share.
Intel and Nvidia announced an agreement under which Intel will produce CPUs that Nvidia will integrate into its AI platform and produce CPUs with Nvidia graphics cards for the PC market. In addition, Nvidia will invest $5 billion in Intel shares.
However, Citi analyst Christopher Danely said the firm expects “Intel’s improvements to be very limited, as better graphics performance does not make Intel’s CPUs superior to AMD, as the processor is the primary performance driver.”
Furthermore, the bank believes that CPUs for Nvidia’s AI platform are not important, “as this appears to be targeted at Nvidia’s Grace CPU product, which we believe represents a market opportunity of approximately $1 billion to $2 billion for Intel, representing 3% of its fiscal 2026 forecast sales.” Meanwhile, the Citi analyst noted that investors believe a deal is the next step, but he would disagree.
“Intel’s stock price has risen approximately 50% since early August, driven by speculation about the Nvidia deal and a subsequent foundry agreement,” the bank said. “We disagree with this view, as we believe Intel’s foundry business lags TSMC by several years.”
“We downgrade Intel’s rating from ‘Neutral’ to ‘Sell’ as we believe the stock price already reflects the success of its advanced foundry business, which we believe has minimal potential,” Citi concluded.
