Intel's Amazon Partnership Fails to Impress Wall Street, Analysts Remain Cautious on Foundry Spinoff

Intel’s recent announcement of a multi-billion-dollar Amazon partnership sparked an 8% jump in its share price. However, major banks like JPMorgan and Bank of America remain skeptical, citing the long timeline for meaningful returns and competition for Intel’s advanced 18A manufacturing process.

Intel’s 8% Share Surge Fails to Sway Wall Street as Analysts Question Long-Term Gains

Intel's shares increased by 8% in aftermarket trading following the recent announcement of a multi-billion-dollar partnership with Amazon. However, Wall Street remains mainly unimpressed. Central investment banks, such as JPMorgan, Bank of America (BofA), and Evercore, expressed skepticism, noting that the transaction's benefits would likely be far off. Analysts are cautious about the partnership's near-term impact, particularly about Intel's advanced 18A manufacturing process, even though Intel did not provide many specifics.

According to BofA, Intel's AI-related gains from the 18A process would not substantially materialize until 2026, which maintains an Underperform rating and a $21 price target. The company is facing stiff competition from Broadcom and other companies. Intel anticipates that production will commence with 18A in 2025; however, the consensus on Wall Street is that revenue from this process will not be realized until later.

BofA also expressed apprehension regarding Intel's $3 billion government contract and the Amazon agreement, asserting that these developments "provoked more questions than they answered." The bank expressed its dissatisfaction with Intel's decision to establish its Foundry Services division as a subsidiary, querying whether it would result in anything other than enhanced transparency. BofA identified an absence of clarity in Intel's most recent announcements, particularly about specific investments in Germany and Poland.

JPMorgan and Evercore Remain Cautious on Intel's Future, Awaiting Concrete Foundry Results

JPMorgan maintained an Underweight rating and a $26 price target for Intel, which was consistent with its assessment. The bank perceived the announcements as offering additional clarification regarding Intel's previously disclosed actions rather than suggesting substantial modifications, per Wccftech.

Nevertheless, JPMorgan did express confidence in the long-term prospects of Intel's foundry division, predicting a significant revenue increase from external foundry consumers by 2027. JPMorgan did not modify its price target in response to the Amazon agreement, which indicated a rise in confidence in Intel's foundry services.

Evercore reiterated this cautious stance, referring to the Amazon partnership and associated announcements as "incremental positives." The company is optimistic about Intel's decision to separate the Foundry Services subsidiary, describing it as a positive development toward increased transparency and accountability. Nevertheless, Evercore is maintaining its in-line rating and $25 price target, and it is awaiting more concrete results from Intel's foundry business before making any adjustments.

Despite Intel's endeavors to captivate the market through its new partnership and structural changes, Wall Street's perspective remains anchored in the long term. Most analysts are waiting for more substantive progress before revising their targets.