This upgrade coincides with Intel’s third‐quarter results that beat expectations. The company reported revenue of US$13.65 billion and earnings per share of US$0.23, surpassing estimated revenue of around US$ 13.15 billion and EPS of US$ 0.01.
The timing is significant because Intel had struggled for years with manufacturing delays and competitive pressure. A raised target suggests the market may be starting to give the firm credit for its turnaround efforts. The challenge now is whether this quarter’s momentum can sustain itself and evolve into a genuine recovery rather than a temporary uptick.
Dissecting the Q3 beat
Intel’s third‐quarter performance delivered more than just a headline beat. The revenue of US$ 13.65 billion represented growth and improvement in both the Client Computing Group and datacenter segments. The EPS of US$ 0.23 went well beyond consensus. Margin performance also impressed, with a reported gross margin near 40 percent which was driven by an improved product mix and lower inventory reserves.
One key driver was strength in Intel’s PC business, helped by the tail‐end of Windows PC refresh cycles as well as legacy hardware transitions. Meanwhile, data‐centre demand regained traction as cloud and enterprise customers stepped up CPU upgrades in the face of AI/accelerator trends.
However, the beat came alongside still‐fragile elements. Supply constraints on Intel’s 10 nm and 7 nm nodes remain and yield challenges on next‐gen nodes like 18A are flagged as limiting factors. So while the quarter marks progress, the underlying operational turnaround still carries execution risk.
Bernstein’s view
Bernstein appears to acknowledge that Intel’s recent performance merits attention, but stops short of declaring full confidence. The firm raised the target to US$ 35 from US$ 21, signalling improved outlook, yet kept the “Market Perform” rating, implying a neutral view on near‐term upside.
In its commentary, Bernstein highlighted several positives: a cleaner financial report compared with past quarters, a stronger balance sheet supported by recent investments, and healthier end markets for PCs and servers. At the same time, the firm emphasised caution: Intel still faces yield risk with its new process nodes, and the PC market remains unsettled. The firm wrote that “this fight is far from over” when referencing Intel’s recovery.
In essence, Bernstein’s view can be summarised as: Intel is showing signs of life and deserves a higher target, but not yet enough to warrant a bullish rating change. Investors are being reminded to temper optimism with recognition of execution risk in a highly competitive chip environment.
What this means for Intel, investors and the industry
For Intel itself, the raised target and strong quarter give the company some breathing room. After years of being written off, the market is willing to acknowledge progress, cash injections, operational discipline, and better margins are part of this narrative. For example, the stock recently hit a 52-week high near US$ 39.87.
From the investor perspective, the raised target may shift the perception of Intel from a purely speculative turnaround play to a somewhat more credible value proposition. That said, with the stock trading near US$ 38–39 and the target at US$ 35, the move may also suggest limited short‐term upside under Bernstein’s assumptions. This dynamic prompts questions about valuation discipline and how much execution risk has already been priced in.
In the broader semiconductor industry, Intel’s improved moment matters. It signals that even legacy chipmakers facing structural challenges can begin to turn the tide. That said, the competitive environment remains fierce: Nvidia Corporation continues to dominate AI accelerators and Advanced Micro Devices is pressing on server and PC CPU fronts. The chip foundry business is also central to Intel’s hopes, but rivals like Taiwan Semiconductor Manufacturing Company (TSMC) remain ahead.
Magnetically, recent large investments, including a US government stake and a US$ 5 billion deal with Nvidia, have underpinned confidence in Intel’s turnaround strategy. Ultimately, Intel’s progress may restore some competitive balance in the market, but whether it closes the technology and margin gaps with its peers remains to be seen.
Looking ahead
Looking forward, a few key milestones will determine whether Intel’s rebound sticks. First, execution of its 18A and 14A process nodes is critical, yield improvement and external foundry client wins will validate the strategy. Analysts caution that yield issues could linger through 2027. Second, upcoming guidance for Q4 and full 2026 will be revealing:
Intel has issued Q4 revenue guidance around US$ 12.8 billion-13.8 billion. Third, trends in the PC and datacenter markets matter, sustained refresh cycles and AI-led infrastructure spending will support growth, while softness would weigh heavily. Risks include competitive pressure from Nvidia, AMD and TSMC, technology delays, and margin squeezing from higher cost of new nodes. The raised target offers momentum, but the real test lies in whether Intel can deliver consistent results over the next several quarters.
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