Intel’s stock experienced a significant surge following an announcement that rival Nvidia will invest $5 billion in the company, aiding in the development of artificial intelligence infrastructure and personal computing products that will integrate Nvidia technology. This investment has sparked optimism among many investors who believe it could signal a shift in Intel’s fortunes. However, one major financial institution has taken a more cautious stance.
Citigroup downgraded Intel’s stock to a “sell” rating even as the company’s shares saw a notable rise. The downgrade led to a 3.3% decline in Intel’s stock during trading hours. Citigroup’s decision sets it apart from other investment firms, as multiple banks have recently raised their price targets for Intel following the news of Nvidia’s investment. Notably, Benchmark even upgraded Intel, setting a price target of $43.
Citigroup’s skepticism primarily revolves around Intel’s foundry business, which the bank believes faces considerable challenges. While the firm raised its price target in light of Intel’s rising stock price, it expressed concern that investor expectations surrounding a potential foundry deal may be overly optimistic. The bank noted that Intel’s foundry division, which generated only $17.5 billion in revenue last year, has seen its revenue decline over the past two years. Furthermore, Intel’s foundry business suffered a staggering loss of $8 billion in 2024, indicating that for every dollar earned from foundry contracts, the company is losing nearly 50 cents.
This foundry division represents a critical area where Nvidia will need to intervene effectively to help revive Intel’s struggling operations. As the uncertainty persists regarding Intel’s ability to turn its foundry business around, the contrasting reactions from investment firms highlight the mixed feelings surrounding the company’s future prospects.
