Mizuho cuts Intel target to $92 despite AI tailwinds

Mizuho's note reflects a common tension in the market: strong fundamental tailwinds against rich valuations. The firm acknowledges Intel's favorable position in Agentic AI, where server OEMs report accelerating demand into 2027, and notes that CPUs play a crucial role in AI infrastructure, acting as managers to GPUs. However, the immediate concern is not the business trajectory but how much investors should pay for it today, given broad valuation compression across AI-related stocks.

The demand picture is bolstered by server refreshes and early signs of corporate PC upgrades, alongside potential foundry growth. Mizuho projects Advanced Packaging Revenue to reach $3.5 billion by 2029, with external customers for Intel's 14A process potentially adding another $3.5 billion. Yet this optimism is tempered by supply constraints that Mizuho warns could lead to customer shortages next year, possibly limiting unit growth and creating openings for competitors.

The price target cut, therefore, is more about market sentiment than business health. Notably, hedge fund interest has grown: 138 funds held Intel at the end of the second quarter, up from 112 previously, with significant positions from Coatue Management and AQR Capital Management. The outcome hinges on whether Intel can navigate its supply constraints and whether the broader AI stock valuation correction persists, making the current target more a reflection of market discipline than a bet against Intel's AI opportunities.