This article first appeared on GuruFocus.
Shares of Intel (NASDAQ:INTC) climbed more than 3% Wednesday after Bank of America maintained a Buy rating on the chipmaker, saying its $20 billion stock offering could support the company's push to expand its foundry operations.
The offering involves 210.5 million shares priced at $95 each, creating an estimated four- to five-percent dilution for existing holders. BofA nonetheless lowered its price target to $145 from $160, citing the impact of dilution and lower valuation multiples across AI-focused semiconductor companies.
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Intel's foundry strategy remains central to the bank's outlook. BofA estimates the company could capture a portion of the global wafer-manufacturing market by 2030 while also expanding its role in advanced chip packaging, potentially supporting higher earnings as production capacity grows.
Intel is also seeing stronger pricing in its server business. Server average selling prices reached about $1,200 in the second quarter, up 43% from a year earlier, according to the analysis.
Execution remains a key risk, particularly around manufacturing yields, new process ramps and winning large outside customers. BofA also noted competitive pressure in advanced packaging as Intel expands its manufacturing ambitions.