Intel Shares Projected to Reach $60
Japan's SoftBank has made a significant investment in Intel, betting on the tech giant's potential revival. The question on many investors' minds is whether Intel can indeed reach the impressive stock price target of $60 per share by the end of 2028.
Several key factors are driving this forecast. First, Intel aims to achieve revenue growth to $64 billion by 2028, primarily fueled by increased demand for AI-related products. This growth is expected to be underpinned by successful execution of U.S. manufacturing expansion, including capitalizing on government support linked to the strategic equity stake.
Cost-cutting measures, such as $1.5 billion in operating expense reductions and workforce cuts, are also crucial to Intel's plan. These measures are designed to help the company achieve adjusted net profit margins of around 20%.
To maintain a reasonable valuation, Intel is aiming for a 20x price-to-earnings (P/E) ratio. When combined with the revenue and margin growth, this ratio supports the $60 stock price.
Intel's progress in technological innovation is another key driver. The company is making strides in AI and advanced processors, with products like the Arrow Lake-based Core Ultra 9 CPUs and Gaudi AI accelerators leading the way.
However, Intel faces unique risks and opportunities posed by the US Government's involvement, which could influence its strategic priorities, especially pushing AI chip development over other segments.
The company's next-generation manufacturing technology maturation could also improve utilization rates of its production facilities. Intel's new 18A process is expected to offer higher performance and lower power consumption compared to TSMC's competing node.
Despite the challenges, Intel is doubling down on the AI processor space with its Gaudi 2 and upcoming Gaudi 3 AI accelerators. More competitive CPU products might drive up Intel's pricing power and margins, further boosting its prospects.
It's worth noting that the foundry business of Intel lost nearly $13 billion last year. However, the market for foundry services is booming, with Taiwan's TSMC seeing its AI-related chip revenue doubling in 2025.
Intel's cost-cutting plan for 2024-2025 includes reducing $1.5 billion in operating expenses and laying off approximately 25,000 employees. This move is expected to streamline operations and improve profitability.
The Trefis High Quality (HQ) Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 - S&P 500, Russell, and S&P midcap, supports this trend. The portfolio's performance metrics indicate less of a roller-coaster ride compared to the benchmark index, offering a more stable investment option.
In conclusion, Intel’s progress in revenue recovery, margin improvement, technological innovation, manufacturing scale, and adaptation to government involvement are the key drivers for the expectation that Intel could reach $60 per share in the 2028 timeframe. The stock price forecast aligns with this trend, but some variations may exist based on assumptions and modeling.
As Intel navigates these challenges and opportunities, investors will be watching closely to see if the tech giant can indeed achieve its ambitious stock price target.
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