Morgan Stanley has raised its price target on Intel to $56 from $41 and boosted its 2027 earnings per share forecast for the company, yet stopped short of upgrading its fundamental stance on the stock.
Analysts led by Joseph Moore lifted their 2027 EPS estimate for Intel from $0.97 to $1.34 per share, attributing the revision largely to stronger server pricing and higher volumes. The bank says its earnings outlook is roughly 20% above Wall Street consensus for both 2026 and 2027.
Data center outlook and CPU trends
Morgan Stanley now anticipates about 30% year-over-year revenue growth for Intel's data center segment in 2026, pegging that business at $21.8 billion. The analysts note that central processing units are playing a larger role in AI workloads than in the past, writing that "it has been clear for a while that CPUs are becoming a more substantive part of the AI surge, as real time agents built by AI are running on CPU."
The bank's global team has adopted a longer-term CPU growth assumption of roughly 30-40% - a rate the analysts describe as well above historical norms but still lower than expectations for graphics processing units.
Why the rating remained unchanged
Despite the higher price target and earnings revision, Morgan Stanley left its rating on Intel at Equal-weight. The analysts pointed to weaknesses in Intel's server product roadmap as a central concern. They cite commentary about shortcomings in Intel's next-generation Diamond Rapids server chip, noting those comments have come "directly from the CEO." By contrast, the analysts describe rival AMD's Venice processor as "a clear major step forward."
Separately, Morgan Stanley said it remains skeptical about Intel's foundry ambitions, considering a positive discounted cash flow outcome for that business to be "remote."
View on AMD
The bank also assigns AMD an Equal-weight rating with a $255 price target. While Morgan Stanley views AMD as "likely a bigger beneficiary of server strength given product leadership," it flagged that a wager on AMD's CPU momentum did not deliver last quarter: the stock sold off sharply despite solid server results. The analysts added that AMD's equity performance is more likely to be driven by GPU outcomes than by CPU gains.
Memory names preferred for exposure
Against this backdrop, Morgan Stanley identified Micron and SanDisk as its favored way to position for strengthening CPU demand, assigning both memory players Overweight ratings. "Our favorite way to play CPU strength is through memory stocks," the analysts wrote.
The team pointed to tight supply conditions in the data center market that they expect will persist through at least 2027, and to emerging long-term supply agreements with hyperscalers as catalysts supporting memory companies' outlooks.
Summarizing their stance, the analysts said they agree that "agentic demand will drive higher CPU growth," but conclude that memory names offer the most attractive risk-reward profile for investors seeking exposure to that trend.
Key takeaways
- Morgan Stanley raised Intel's price target to $56 and increased 2027 EPS to $1.34, reflecting stronger server pricing and volumes.
- The bank retained Equal-weight ratings on both Intel and AMD, citing Intel's server roadmap concerns and AMD's reliance on GPU-driven performance.
- Micron and SanDisk were named the preferred plays, both rated Overweight, as memory exposure is viewed as the best risk-reward to capture CPU-led demand.
Sector impact
- Semiconductor sector - analyst revisions and ratings adjustments directly affect investor positioning across CPUs, GPUs, and memory.
- Data center hardware and cloud infrastructure - projected CPU growth and memory tightness influence vendor revenue and supply contracts.