Key Takeaways
- Morgan Stanley increased Intel’s price target from $41 to $56, driven by robust server demand projections
- The firm maintained an Equal-weight rating on Intel, expressing caution about upcoming chip generation developments
- Memory chip manufacturers Micron and Sandisk received top recommendations for capitalizing on AI-fueled CPU growth
- Sandisk experienced a 1.6% premarket decline following its Nasdaq 100 inclusion, after gaining 12% the previous week
- Wells Fargo boosted Sandisk’s price target from $675 to $975 while maintaining an Equal Weight stance
Morgan Stanley adjusted its outlook on Intel this week, increasing the price target while declining to issue a buy recommendation. The firm elevated the target from $41 to $56, responding to enhanced server market dynamics and revised earnings projections through 2027.
The analyst team headed by Joseph Moore revised their 2027 earnings forecast for Intel upward from $0.97 to $1.34 per share. This positioning places Morgan Stanley approximately 20% above the Street’s consensus earnings expectations for Intel across both forecast years.
The firm anticipates Intel’s data center division will expand at roughly 30% annually in 2026, generating $21.8 billion in revenue.
Morgan Stanley maintained its Equal-weight stance on Intel despite the target increase. The primary reservation centers on Intel’s product development pipeline. The analysts referenced concerns about the next-generation Diamond Rapids server chip, acknowledging issues previously highlighted by Intel’s chief executive.
By contrast, AMD’s Venice processor received recognition as “a clear major step forward.” Morgan Stanley assigns AMD an Equal-weight rating with a $255 price target.
The analyst group views AMD as positioned to capture greater benefits from server market expansion due to its product advantages. They observed that AMD’s stock performance typically responds more significantly to GPU developments than CPU progress.
Memory Chip Manufacturers Emerge as Top Investment Choice
Morgan Stanley designated Micron and Sandisk as optimal investment vehicles for capturing AI-driven CPU demand growth. Both companies carry Overweight ratings.
“Our favorite way to play CPU strength is through memory stocks,” the analysts wrote. They pointed to tight data center supply conditions expected to last at least through 2027, plus long-term supply deals forming with major cloud providers.
The firm expressed skepticism regarding Intel’s foundry operations, characterizing favorable outcomes in that segment as “remote.”
Sandisk Achieves Nasdaq 100 Status
Sandisk formally entered the Nasdaq 100 index on the day Morgan Stanley’s analysis circulated. The stock declined 1.6% to $906.48 during premarket hours.
This decrease followed a 12% jump the prior Monday when Nasdaq initially disclosed the inclusion. This “buy the rumor, sell the news” dynamic frequently accompanies index membership changes.
Wider market headwinds contributed to the retreat. S&P 500 futures declined 0.4% following escalating U.S.-Iran tensions during the weekend that triggered concerns about ceasefire stability.
Atlassian exits the Nasdaq 100 to accommodate Sandisk’s entry. Atlassian shares dropped 1.4% in premarket trading as index funds executed portfolio adjustments.
Wells Fargo analyst Aaron Rakers elevated his Sandisk price target from $675 to $975 on the same day, preserving an Equal Weight rating. The firm enhanced its 2026 EPS projection and established its 2027 EPS estimate at $150.
Wells Fargo acknowledged it had “clearly missed” Sandisk’s run. The stock is up roughly 2,990% over the past year, fueled by surging demand for memory products in data centers.
The firm observed that consensus valuation metrics hover around 6 to 7 times price-to-earnings based on peak EPS, which it views as limiting additional upside potential currently.
Wells Fargo’s revised $975 target exceeds the current premarket price, though its Equal Weight rating indicates the firm stops short of recommending aggressive buying.
