Key Takeaways
- Morgan Stanley elevated Intel’s price target from $41 to $56 based on robust server market momentum
- The firm maintained an Equal-weight stance on Intel amid worries over upcoming chip generation performance
- Micron and Sandisk emerged as Morgan Stanley’s top choices for capitalizing on AI-fueled CPU growth
- Sandisk entered the Nasdaq 100 index but experienced a 1.6% premarket decline following a prior week’s 12% jump
- Wells Fargo upgraded Sandisk’s price target from $675 to $975 while maintaining an Equal Weight stance
Morgan Stanley increased its valuation outlook for Intel this week but refrained from issuing a buy recommendation. The financial institution elevated the target from $41 to $56, propelled by strengthening server market dynamics and revised upward earnings projections for 2026 and 2027.
The research team headed by Joseph Moore adjusted their 2027 earnings forecast for Intel upward from $0.97 to $1.34 per share. Morgan Stanley’s current position stands approximately 20% higher than the Street’s consensus earnings expectations for Intel across both fiscal years.
The firm anticipates Intel’s data center division will experience approximately 30% year-over-year expansion in 2026, hitting $21.8 billion in total revenue.
Despite this optimism, Morgan Stanley maintained its Equal-weight assessment on Intel. The primary hesitation centers on Intel’s product development trajectory. Performance limitations in its upcoming Diamond Rapids server chip have been acknowledged by Intel’s own chief executive, according to the analysts.
In contrast, competitor AMD’s Venice processor received praise as “a clear major step forward.” Morgan Stanley also assigns an Equal-weight rating to AMD with a $255 valuation target.
The research team believes AMD stands to benefit more substantially from server market strength given its product advantage. However, they observed that AMD’s stock price tends to react more significantly to GPU developments rather than CPU achievements.
Memory Chip Manufacturers Lead Morgan Stanley’s Investment Preferences
Morgan Stanley identified Micron and Sandisk as their preferred investment vehicles for capturing AI-driven CPU demand growth. Both companies carry Overweight ratings.
“Our favorite way to play CPU strength is through memory stocks,” the analysts wrote. They highlighted constrained data center supply conditions anticipated to persist through at least 2027, combined with emerging long-term supply agreements with major cloud providers.
The institution expressed doubt regarding Intel’s foundry operations, characterizing a favorable outcome as “remote.”
Sandisk Achieves Nasdaq 100 Status
Coinciding with Morgan Stanley’s research release, Sandisk formally gained admission to the Nasdaq 100. However, shares retreated 1.6% to $906.48 during premarket activity.
This decline came after a substantial 12% climb the preceding Monday when Nasdaq initially revealed the inclusion. This “buy the rumor, sell the news” dynamic frequently occurs with index membership changes.
Broader market headwinds contributed to the downturn. S&P 500 futures declined 0.4% following escalated U.S.-Iran tensions over the weekend that sparked concerns about a potentially disrupted ceasefire.
Atlassian is exiting the Nasdaq 100 to accommodate Sandisk’s entry. Atlassian shares dropped 1.4% in premarket trading as index funds executed portfolio rebalancing.
Wells Fargo analyst Aaron Rakers elevated his Sandisk price objective to $975 from $675 on the same date, retaining an Equal Weight rating. The firm boosted its 2026 EPS projection and established its 2027 EPS forecast at $150.
Wells Fargo conceded it had “clearly missed” Sandisk’s remarkable ascent. Shares have skyrocketed roughly 2,990% over the trailing year, driven by explosive demand for memory components in data center applications.
The firm observed that consensus valuation hovers around 6 to 7 times price-to-earnings on peak EPS, which it views as limiting additional upside potential currently.
Wells Fargo’s revised $975 target exceeds the prevailing premarket price, yet its Equal Weight designation indicates the firm isn’t actively recommending aggressive accumulation.
