Key Morningstar Metrics for Intel
- : USD 90Fair Value Estimate
- : ★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : Very HighMorningstar Uncertainty Rating
We are raising our fair value estimate for no-moat Intel INTC to USD 90 from USD 60. Server processor demand is poised to grow faster than our prior expectations, which bodes well for Intel over the next five years.
Why it matters: Intel’s rival, AMD, projects that the server CPU market will be twice as large as its projections just six months ago, rising to USD 120 billion by 2030 with a 35% CAGR, up from USD 26 billion in 2025.
- We know that Intel was prospering in the near term from high demand for server CPUs used in general-purpose computing, AI hosts, and head nodes within AI GPU servers, and agentic AI applications.
- However, the runway for medium- and long-term growth, as indicated by AMD and others, is quite a bit above our projections from just a couple of weeks ago. Also, our fears of slower PC revenue growth will likely be a nonissue and not provide much of an offset to server growth.
The bottom line: Our prior fair value estimates will likely prove to be too conservative regarding the server CPU opportunity. While we now think the massive rally in Intel’s shares was mostly justified, we still think the shares, trading in the USD 110 range today, are a bit overvalued.
Coming up: This upside will likely come from higher CPU volumes, driven by comments from both Intel and AMD that the CPU-to-GPU ratio in data centers should reach 1:1, versus prior ratios of 1:4 or 1:8. Pricing may also get a boost given tight capacity.
- Regarding risks, we foresee a host of competition. Among x86-based CPUs, AMD is currently growing faster and has gained share in recent years. Nvidia is also delivering its Vera CPU to more and more of its AI rack-scale solutions.
- Additionally, Arm is bringing its AI CPU to market while still providing the instruction set to power several CPUs developed by hyperscalers, such as Amazon’s Graviton. In our bear case, it’s plausible that the server CPU market could explode, but the value is not captured by Intel.
