What happened

Shares of semiconductor-maker Intel (NASDAQ:INTC) -- down big-time in Thursday trading -- staged a sharp rebound on Friday, closing the day 6.1% higher.

One reason for the shares' strength was obvious: On Friday, the U.S. Department of Labor  reported that the U.S. economy added 312,000 jobs in December. This better-than-expected news sent market averages soaring today, and Intel stock went along for the ride.

Semiconductor chip

Merrill Lynch's upgrade helped revive Intel stock today. Image source: Getty Images.

So what

But that wasn't the only reason Intel stock rose Friday. In addition to the ebullient economic news, Intel stock won an upgrade on Wall Street. Analysts at Merrill Lynch said Friday that they're upgrading Intel stock to "buy" and assigning the shares (which closed at $47 and change) a $60 price target.

As reported by TheFly.com, Merrill noted that although semiconductor sales in general are expected to shrink 3% in 2019, Intel in particular has "attractive exposure to growth trends in cloud computing, AI, advanced autos and 5G."

Now what

Will that exposure be enough to deliver the 27% profit on Intel shares that Merrill Lynch is expecting?

Maybe, maybe not. Merrill Lynch also notes that Intel has to overcome a few problems to realize its potential: Overcoming competition from and market share loss to AMD is one. Delays in bringing its own line of 7-nanometer semiconductor chips -- and even 10nm chips -- to market is another.

So far, with Intel trading at a P/E ratio of less than 15, investors have been betting that Intel will fail at these efforts. Today, after Merrill Lynch's endorsement, they appear to be rethinking that bet.

Check out the latest Intel earnings call transcript.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.