Intel (INTC 9.07%) stock jumped 4.2% through 11 a.m. ET on Tuesday after Wells Fargo analyst Aaron Rakers raised his price target on rival Advanced Micro Devices (AMD 7.19%) stock to $615 per share this morning.
Rakers didn't specifically mention Intel in the note, but what he did say seems to be getting investors more excited about the stock he didn't mention than the one he did. (AMD shares are up only 3.6%.)
Image source: Intel.
Why Wells Fargo likes chip stocks
Once archrivals in semiconductors, both AMD and Intel have been relegated to the role of also-rans in the race for artificial intelligence dominance -- second-stringers just trying to catch up to Nvidia (NVDA 1.18%), which is way out ahead. But Rakers sees potential in AMD as the AI market switches from a preference for GPUs to train large-language models to CPUs that may be more useful for answering AI questions (i.e., "inference").
Most of the AI money remains in GPUs, with Rakers forecasting revenue of $15.6 billion this year, $40.6 billion in 2027, and $63 billion in 2028 for AMD's GPU business, for example. But CPUs are growing fast as well, and Rakers sees CPU revenue growing 68% in 2026, followed by 28% growth in 2027, and 22% more in 2028.
And if he's right about this about AMD, it could mean good things for Intel as well.
NASDAQ: INTC
Key Data Points
What's next for Intel stock
Even if he is right about the big picture, there's still valuation to consider -- and the risk that Intel's success in CPUs is already baked into the stock price.
Consider that at 30 times earnings, Nvidia's not being priced very highly for its dominance, while AMD costs 180 times earnings, and Intel shares fetch more than 900x! At these prices, Nvidia seems the safer bet.
