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Goldman Sachs released its initial coverage report on Intel, giving it a neutral rating and a 12-month target price of $150 (up 13.9% from the benchmark stock price of $131.65). Behind this seemingly contradictory judgment is a clear investment logic: the foundry and server CPUs are indeed growth highlights, but these opportunities had already been priced in by the market. In contrast, AMD, Nvidia, and Broadcom offer better options in terms of visibility and valuation.

The Contradiction in a "Neutral" Rating

The initial coverage gives a neutral rather than a buy rating, which in itself is interesting. Goldman Sachs did not say that Intel is not good, but instead clearly pointed out two definite positives.

First is the foundry business. Intel is advancing its external wafer business in advanced packaging (especially EMIB technology), and Goldman Sachs expects this revenue to reach $11 billion by 2030 (base scenario), going from zero to a billion-dollar level. This is growth driven by customer confirmations, not a hollow growth story.

Second is server CPUs. Driven by Agentic AI, the demand for server computing power in the enterprise sector will continue to grow. Intel, with the stickiness of the x86 architecture in the enterprise market and the sunk costs, is expected to maintain a 28% compound annual growth rate until 2030. This indicates that Intel's revenue expectations for server CPUs are on the rise, not being squeezed.

However, because both stories are true, they have already been priced in by the market. Intel's current stock price reflects these expectations. Based on profitability from 2030, a target price of $150 with a 21 times price-to-earnings ratio means that Goldman Sachs believes there is not much upside for buying at the current price. Moreover, in terms of supply chain certainty and valuation attractiveness, AMD, Nvidia, and Broadcom have performed better. This is the core reason why Goldman Sachs gives a neutral rather than a buy rating.

The Foundry Business is a Billion-Dollar Gamble

Intel’s foundry story is clear, but the focus is not on scale itself but on cost and competitiveness.

Advanced packaging costs are much lower than wafer foundry costs. EMIB (Embedded Multi-Die Interconnect Bridge) technology allows Intel to do chip integration for customers without building new fabs. This is good news for customers (lower costs, faster cycles) and for Intel as well (lower capital expenditures, higher gross margins). Goldman Sachs estimates that the gross margin for this business could be over 50%, far higher than the 20-30% for traditional wafer foundries.

The time window for external wafer business opens around 2028. Although Intel's 7 nm and below processes are behind TSMC, many customers are willing to pay a premium to diversify supply chain risks in the geopolitical context of Europe and the U.S. Goldman Sachs predicts that by 2030, this business revenue could reach $11 billion, suggesting that Intel’s gross margin contribution in this area would be sufficient to enhance overall profitability.

But this story has a time cost. The profit growth in 2027 and 2028 will mainly come from the core business (CPU and GPU). The foundry business won’t see substantial volume until after 2028. Therefore, if you expect Intel to show astonishing performance in the next 12 months, the foundry story won't help you. This is also why Goldman Sachs is not optimistic about Intel’s current stock price.

Server CPU Growth of 28%, But Peers are Faster

Server CPUs are Intel's traditional stronghold, and the rise of Agentic AI has revitalized this business.

The difference between Agentic AI and traditional large language model inference is that it requires frequent multi-turn interactions and real-time responses, increasing the demands on CPUs and memory. This means enterprises cannot just stack GPUs; they also need efficient CPUs. Intel has two advantages here: one is the completeness of the x86 architecture ecosystem, and the other is the procurement habits and supply chain dependencies of enterprise customers on Intel.

Goldman Sachs predicts that Intel’s server CPUs will have a compound annual growth rate of 28% by 2030. This sounds good, but it is relatively average in the AI chip cycle. Nvidia’s data center division growth rate is far higher (almost a 200% year-on-year growth in 2024), and Broadcom and AMD have also generally higher growth rates in specific segments.

The key issue is that Intel's growth comes from a very large base. The CPU business is now Intel's main source of revenue, and the growth space is limited by the overall expansion speed of the server market. In contrast, the growth ceiling for GPUs and other AI-related chips is much higher. Therefore, from a relative return perspective, the expected returns on investments in GPU and network chip manufacturers may be higher.

Why Peers are More Favored by Goldman Sachs

Among other tech chip companies covered by Goldman Sachs, AMD, Nvidia, and Broadcom all received buy ratings. Why is Intel excluded?

The core lies in visibility and valuation match. The demand for Nvidia's data centers has almost no decline risk, and there is still significant growth potential until 2030. AMD has a more aggressive product roadmap than Intel for both CPUs and GPUs. Broadcom is positioned at the main growth drivers of large data centers in the network chip field. These companies have higher growth expectations and lower risks.

At the same time, although Intel's foundry story is appealing, the commercialization validation period is longer. Visible orders start from 2027, and real-scale contributions won’t be seen until 2030. In contrast, the demand curve for GPU chip manufacturers has already been validated, and the discussion is only about how much growth rate there will be.

From a valuation perspective, Intel's expected price-to-earnings ratio in 2028 is 21 times; although Nvidia and Broadcom have higher multiples, their growth rates are also high. For investors seeking high certainty in growth, high growth with high multiples may actually be more cost-effective than low growth with low multiples.

The Judgment Behind Goldman Sachs' Neutral Rating

Goldman Sachs' neutral rating actually implies a judgment: Intel will not fall, nor will it soar. In the medium term, Intel will be suppressed by the strong performance of consumer chips and the hype of the AI chip cycle. But from a long-term perspective (3-5 years), the profit contributions from foundry and server CPUs will gradually emerge, and the target price of $150 will be validated.

The upward risk of this judgment lies in: the foundry business attracts clients beyond expectations, or the server CPUs protect their market share in the Agentic AI wave better than expected. The downside risk is: the mass production progress of advanced foundry processes is delayed, or Intel's CPU market share is captured by AMD faster.

Catalysts include: confirmation of foundry orders each quarter, the market performance of the next-generation Xeon, and the realization of gross margin improvements. However, these catalysts are not things that will come "right away." Therefore, for investors needing quick returns, Intel may not be the optimal choice.

Conclusion

Goldman Sachs’ logic is clear: Intel has a story, and the story is valid, but the value of the story has already been priced in. In an era where peers provide faster growth and better certainty, the pursuit of steady growth by Intel naturally places it on the observation list rather than the buy list.

Disclaimer

This article is a summary and interpretation of third-party brokerage research reports by Tide Research. The ratings, target prices, earnings forecasts, and related judgments quoted in the text are the views of Goldman Sachs analysts, representing only the position of their respective organizations and do not represent the views of Tide Research, nor do they constitute any investment advice.

When reading, please note three points: First, the target price is the analyst's expectation for about the next 12 months; it is a prediction, not a commitment, and will be repeatedly adjusted according to performance and market conditions. Second, sell-side research reports are inherently biased towards the positive, and some covered companies have investment banking relationships with the brokerage. Third, the value of a research report lies in the mainline logic and its premise assumptions, rather than in a single target price. Look at the logic, not just the price.

Market has risks; decisions require independence. This article should not be used as a basis for buying or selling any securities.

Data Source: Goldman Sachs Research (James Schneider et al., June 25, 2026) · SEC financial report

Tide Research · June 2026