Bank of America Downgrades Intel as Its Turnaround Faces New Delays

Bank of America has downgraded Intel ($INTC) from Buy to Neutral, warning that the chipmaker’s recovery may take longer than expected as weakening PC demand and supply constraints offset strong growth in its data center business.
Analyst Vivek Arya lowered his price target from $145 to $100, citing a sharp decline in PC shipments and limited progress in securing external foundry customers.
Intel reported third-quarter revenue of $16.5 billion, up 21% year over year. Data center revenue surged 78% to $7.3 billion, while client computing revenue, primarily from PC chips, reached $8.1 billion.
However, the fourth-quarter outlook disappointed investors. Intel forecast revenue of $15 billion to $16 billion, below the roughly $17 billion consensus estimate. It also expects non-GAAP gross margin to decline from 44.1% to 38%.
Intel shares fell nearly 29% on Oct. 30, wiping out approximately $140 billion in market value.
**PC demand remains a major headwind**
Arya expects PC shipments to decline 25% to 30% sequentially in the fourth quarter, with further inventory adjustments possible in the first half of 2027. Intel’s 2027 earnings estimate was cut by 16% to $1.69 per share.
The broader PC market is also under pressure. Gartner data showed worldwide shipments fell 22.4% year over year to 55.4 million units in the third quarter. Rising memory and storage costs are contributing to higher PC prices and weaker demand.
**Data center demand offers support**
Intel’s server business is benefiting from growing demand for CPUs. CFO David Zinsner expects industry server CPU shipments to grow more than 30% in both 2026 and 2027.
However, supply constraints and competition from AMD and ARM-based processors remain challenges.
**Foundry progress is still unproven**
Intel’s longer-term turnaround also depends on its ability to attract outside customers to its manufacturing business. Bank of America estimates external foundry revenue was approximately $406 million in the third quarter, compared with the $8 billion to $10 billion in annual outside revenue assumed in Arya’s valuation.
CEO Lip-Bu Tan said the company expects to announce several potential customers over the next two quarters. Possible opportunities include Apple, MediaTek, and Elon Musk’s Terafab project, although Bank of America has not included these potential deals in its base case.
Despite the downgrade, Arya maintained a $100 price target and sees a possible path to $5.89 in earnings per share by 2030 if major foundry customer wins materialize between 2028 and 2030.
For now, Bank of America wants to see stronger evidence of PC market stabilization and meaningful external foundry demand before becoming more positive on Intel’s recovery.