Chip manufacturing giant Intel Corporation received a price target hike from investment bank Mizuho earlier today. Mizuho upgraded Intel's share price target to $23 from $20 and kept a Neutral rating on the stock. Intel's shares currently trade for $23, and in its investment note, the bank outlines several key factors revolving around Intel's valuation. It notes that a takeover by Intel or a spin-off of some business divisions to Broadcom have their own set of difficulties. Yet, the bank notes that Intel stands to benefit from the Trump administration's eagerness to bring AI chip manufacturing back to the US.
Intel Price Target Raised To $23 From $20 By Mizuho - Neutral Rating Maintained
One beneficiary of the Trump administration's strategy of manufacturing more products in America has been Intel's stock. The shares have gained 21% year-to-date, primarily on the back of a 28% jump in February that led to the stock's best performance in decades. Intel's stock started to make serious gains after Vice President JD Vance's comments in Paris to make the most advanced AI chips in the US signaled to investors that Intel would be the primary beneficiary of additional government attention due to its well-established foundry presence in America.
Following Vance's remarks, a host of media reports have claimed that Intel's foundry business could be spun off and bought by TSMC or a consortium of firms. Others have claimed that the Taiwanese company could take a minority stake to allow it to have a say in Intel's manufacturing operations while avoiding antitrust scrutiny.
Mizuho's note, in which the bank raises Intel's share price target to $23 from $20, covers all these possibilities. Given significant constraints, it concludes that TSMC's outright purchase of Intel's foundries or a spin off to Broadcom is unlikely to materialize.
As per Mizuho analyst Vijay Rakesh, while TSMC completely taking over Intel is possible, it will face headwinds from the US government. Rakesh believes that the US government, given Intel's strategic importance and status as a national symbol, is likely to prefer that American companies are also involved in the process of buying the firm. A similar deal of Japan's Nippon Steel acquiring US Steel was vetoed by the Biden administration, with President Trump stating earlier this month that he would approve of Nippon acquiring a minority stake in US Steel.
Rakesh adds that a spin-off of certain products to Broadcom is also possible. However, on this front, he believes that Broadcom has significant debt after its VMware acquisition. The remaining two outcomes that he notes are a sale of Intel's sale of its Mobileye business and a decision to take Altera private earlier than expected. Both of these can inject Intel with cash to help streamline its operations.
However, the outcome that contributed to Mizuho raising Intel's share price target is the Trump administration's involvement in Intel's turnaround. Rakesh sees "INTC's foundry potentially gaining steam under a renewed push by the Trump administration to bring AI chip production to the US," which leads him to raise the firm's share price target to $23 from $20.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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