Benchmark upgrades Intel after 'watershed' Nvidia pact

Investing.com -- Benchmark upgraded Intel to Buy, saying the U.S. chipmaker’s partnership with Nvidia marks a watershed moment that could restore confidence in its product roadmap and attract new foundry customers.

The brokerage raised its price target to $43, or nearly 32 times estimated 2027 earnings, even after Intel shares rallied 53% so far this year, including a 23% surge on Thursday when the deal was announced.

Nvidia and Intel said they will jointly develop data center and PC products that combine Intel’s x86 CPUs with Nvidia’s GPUs.

The companies estimate the collaboration could address as much as $50 billion in annual market opportunity. As part of the deal, Nvidia will invest $5 billion in Intel at $23.28 a share.

Benchmark called the agreement a strong vote of confidence in Intel’s x86 roadmap, which has been steadily losing share to rival AMD and more recently to Arm-based designs.

Pairing Intel CPUs with Nvidia’s dominant AI accelerators could strengthen its server position and boost its prospects in the notebook market, where its own graphics offerings have trailed competitors.

The brokerage also said Nvidia may eventually become Intel’s first major foundry customer if its 14A process technology proves competitive, a move that would mark the most significant near-term catalyst for Intel’s shares.

“While we expect near-term volatility following yesterday’s strong move, we recommend fundamental investors use any share price weakness as an opportunity to build long-term positions,” Benchmark analysts said.

AMD is seen as the near-term loser from the agreement, though Benchmark noted Intel is unlikely to ship co-developed parts with Nvidia until 2027, leaving AMD in a strong position until then.

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