Intel turnaround case hinges on foundry gains and AI chips

Intel is positioned with a BUY recommendation, with a potential entry above $107 and a profit target near $141.50. The case points to stronger operating momentum after Q1 2026 revenue reached $13.6 billion, up 7% year-on-year, with earnings of $0.29 per share versus a forecast of $0.01.

Data centre and AI demand is a central driver, with the division growing 22% year-on-year to $5.1 billion. Management guided Q2 revenue to $13.8 – $14.8 billion, ahead of the $13.03 billion expected by analysts. Intel’s foundry business is also showing progress, with 18A yields improving to about 85 working chips out of every 100, up from 65 three months earlier.

The planned Crescent Island AI chip is framed as a lower-cost alternative to Nvidia’s data centre accelerators, using cheaper memory and avoiding special liquid cooling requirements. Technical signals are described as constructive, including support at the lower bound of an ascending channel, trading above the 200-day SMA and a retracement that held above the lower Bollinger Band.

Risks remain significant. Intel’s factory division generated $5.4 billion last quarter, but only $174 million came from outside customers, while restructuring costs of over $4 billion pushed the company to a paper loss. Nvidia dominates AI chips, AMD remains a threat in server processors, and major foundry customer decisions are expected between late 2026 and early 2027.