Server CPU demand explodes, boosting performance expectations! Intel Corporation (INTC.US) has its pre-earnings outlook raised to $80 by Susquehanna.

Recently, the strong performance of Intel Corporation (INTC.US) will announce its first quarter results for 2026 after the US stock market on April 23. Investment bank Susquehanna cited "CPU demand difficult to meet" as the reason, raising its target price for Intel Corporation from $65 to $80. This target price represents an increase of about 25% from the stock's closing price of $63.81 on Tuesday. Analyst Christopher Roland stated in a client report discussing Intel Corporation's upcoming first quarter results, "We expect Intel Corporation's first quarter performance in 2026 to meet or slightly exceed expectations, primarily driven by stronger server CPU demand, but partially offset by weak shipment volume from PC ODM (Original Design Manufacturer) outsourcing." "Specifically, the first quarter ODM shipment volume trend is weaker than our previous expectations, posing a risk to expectations for the Client Computing Group (CCG) in the first quarter. We expect a 13% quarter-on-quarter decline in CCG performance, weaker than the market's general expectations." The analyst added, "In terms of servers, the research situation remains positive as agent-based AI workloads are driving a turning point in CPU demand." "Importantly, Intel Corporation has indicated that it is currently unable to meet strong demand due to supply constraints expected to peak in the first quarter. However, the company expects these constraints to ease starting in the second quarter, thereby driving performance for the remaining quarters of 2026 to be above seasonal levels (which we believe will be primarily driven by the server business)." Despite strong performance in the server business, analysts still give Intel Corporation a "neutral" rating. Analysts point out that the storage chip shortage is dragging down PC assembly, which may have a negative impact on Intel Corporation. The analyst stated, "Looking ahead, we expect ODM shipment volumes to experience double-digit percentage declines in 2026 as the storage chip shortage continues." Regarding Intel Corporation's ODM business, analysts find the company's decision to join SpaceX and Tesla, Inc.'s Terafab project "interesting." They also stated that the company holds an "optimistic" view towards using its 14A manufacturing process for external customers, with some collaborations described as "very active." Nine days of consecutive gains! Intel Corporation has recently shown strong momentum Intel Corporation is one of the hottest stocks recently. Data shows that as of Monday's close, Intel Corporation has risen for nine consecutive trading days. Intel Corporation's stock price has risen by nearly 45% in April, and has risen by almost 73% year-to-date, outperforming the S&P 500 and Nasdaq indices, as well as AMD (AMD.US) and NVIDIA Corporation (NVDA.US). Intel Corporation's recent rise stems from its agreement in early April to pay $14.2 billion to repurchase half of one of its Irish factories from Apollo Global Management Inc. This move is seen as a signal that Intel Corporation is making progress in turning losses into profits. Last week, Intel Corporation announced its participation in the Terafab project, involving Tesla, Inc., SpaceX, and xAI chip manufacturing. In addition, Alphabet Inc. Class C (GOOGL.US) has pledged to use Intel Corporation's Xeon processors in data centers, and is collaborating with Intel Corporation to develop IPUs based on custom ASICs. These news have boosted Intel Corporation's stock price. For Intel Corporation's upcoming earnings announcement next week, the market currently expects the company's first quarter revenue to be around $12.6 billion, with a loss per share of $0.08. CPU returns to the "C position" in the age of intelligent agents For the past two years, the narrative of the artificial intelligence (AI) industry chain has been dominated by GPUs, which has also driven the soaring stock price of NVIDIA Corporation. The presence of CPUs in AI servers has been weak. This is because, in the training era, the most critical bottleneck is parallel computing capabilities, with GPUs handling the heaviest matrix operations, while CPUs are more responsible for general control and basic scheduling tasks. However, with the explosive growth of AI intelligent agents and reinforcement learning workloads, the strategic position of CPUs in data centers is undergoing a structural reassessment. The essence of intelligent agents is not just to provide longer answers to problems, but to break down a single request into a complete workflow. Models are no longer just generating an answer, but executing a process. Once AI transitions from "calculating once" to "running a process", the system's reliance on CPUs will significantly increase. The reason is that many key workloads are not suitable for GPUs to handle. Tasks such as task scheduling, thread scheduling, process management, sandbox execution, pre- and post-processing, cache coordination, and state maintenance are all typical CPU tasks. Especially in multi-agent collaborative scenarios, where multiple intelligent agents run concurrently, call each other's tools, share states, the demand for CPUs' core number, thread number, single-core performance, and memory management capabilities are all increased. Dylan Patel, the chief analyst at the well-known semiconductor analysis firm SemiAnalysis, bluntly stated in a deep interview on April 8 that the paradigm of AI workloads is evolving from simple text generation to complex intelligent agents and reinforcement learning, and CPUs are facing "extremely serious capacity shortages." The latest report from market research firm TrendForce confirms this assessment - the current CPU-to-GPU ratio in AI data centers is about 1:4 to 1:8, while in the intelligent agent AI era, this ratio is expected to evolve to 1:1 to 1:2. In terms of market size, Creative Strategies predicts that the data center CPU market will grow from $25 billion in 2026 to $60 billion in 2030; if combined with the demand for intelligent agents, the scale is expected to approach $100 billion. "With wolves at the door"! Intel Corporation still needs to work harder This structural shift has triggered a chain reaction at both ends of supply and demand. Intel Corporation and AMD have raised prices for some CPU product lines by the end of the first quarter of 2026. Meanwhile, NVIDIA Corporation and Arm both announced their entry into the server CPU market in March 2026 - the fact that a GPU giant and an IP licensing company made the same choice in the same month is not a coincidence, but a concentrated release of market signals. Intel Corporation's Xeon processors have long held over 95% of the market share in the data center CPU market. However, this dominant position began to weaken in 2021 - issues with the Intel 7 process resulted in the delay of the Xeon Sapphire Rapids release by nearly two years, opening up a market gap for AMD's EPYC Milan. Intel Corporation plans to launch two flagship products in 2026. One is the Xeon 6+ (Clearwater Forest) with the Darkmont architecture, featuring 288 cores/288 threads, and a TDP of around 450W; the other is the Xeon 7 (Diamond Rapids) with the Panther Cove-X architecture, with up to 256 cores/256 threads, and a TDP of up to 650W. Both products are based on Intel Corporation's most advanced 18A process, and introduce the Foveros Direct hybrid bonding technology for the first time. However, TrendForce points out that due to ongoing issues with the 18A process yield, the mass production of both products may be delayed until 2027. In comparison, the pace of competition from rival AMD is more steady, with its 2026 flagship product EPYC Venice set to use Taiwan Semiconductor Manufacturing Co., Ltd.'s N2 process, Zen 6 architecture, and incorporate CoWoS-L and SoIC advanced packaging to achieve 256 cores/512 threads through simultaneous multi-threading (SMT) technology - the highest thread count in the current market. TrendForce predicts that AMD will continue to eat market share from Intel Corporation in 2026. In addition to the two giants Intel Corporation and AMD, a group of non-traditional players are entering the server CPU race at an unprecedented speed, seeking to fundamentally change the competitive landscape. In March, NVIDIA Corporation announced the Vera CPU as a standalone product to meet customers' needs for more flexible CPU:GPU configurations. Vera, based on NVIDIA Corporation's proprietary Olympus architecture, uses Taiwan Semiconductor Manufacturing Co., Ltd.'s N3 process and CoWoS-R packaging, offering 88 cores/176 threads, and is equipped with 1.8 TB/s NVLink-C2C interconnect for memory sharing with NVIDIA Corporation GPUs. NVIDIA Corporation also introduced the Vera CPU rack, integrating 256 CPUs in a single rack, totaling 22,528 cores/45,056 threads, with up to 400 TB of memory. Also in March, Arm announced the launch of its first self-developed CPU product, the Arm AGI CPU, ending its positioning as a pure IP licensing company after 35 years. This product, based on Taiwan Semiconductor Manufacturing Co., Ltd.'s N3 process and Neoverse V3 architecture, provides 136 cores/136 threads, a TDP of 300W, supports DDR5-8800 memory and PCIe Gen6. Arm also simultaneously introduced two rack configurations: a fan-cooled version with 60 AGI CPUs (8,160 cores, around 180 TB of memory), and a liquid-cooled version supporting 336 CPUs (45,696 cores, 1 PB of memory). Major cloud service providers (CSPs) are also speeding up their self-developed CPU layout. Amazon.com, Inc.'s AWS released the Graviton5 (192 cores/192 threads) based on Taiwan Semiconductor Manufacturing Co., Ltd.'s N3 process in December 2025, and jointly deployed it with the self-developed Trainium 3 AI ASIC to reduce AI computing costs. Microsoft Corporation (MSFT.US) launched the Cobalt 200 (N3 process, 132 cores/132 threads) in November 2025. Alphabet Inc. Class C plans to launch the Axion C4A.metal bare metal version and the next generation Axion N4A in 2026, focusing on the best price-performance ratio. In summary, Intel Corporation's recent stock performance is impressive, and the strong demand for server CPUs in the age of intelligent agents has become a solid reason to be optimistic about Intel Corporation's prospects. However, as competition becomes increasingly fierce and Intel Corporation has yet to fully emerge from its difficulties, Wall Street analysts are generally cautious about the stock. Among the 52 analysts covering the stock tracked by the media, only 10 give a "buy" rating, while 6 give a "sell" rating, more than twice the S&P 500 component stock average. In addition, Intel Corporation's current trading price is about 27% higher than the average target price given by analysts, indicating that its stock price has risen too quickly and too sharply. The stock's current forward P/E ratio is over 90 times, hitting a historical high - this figure is more than 50% higher than during the peak of the internet bubble, while the average P/E ratio of the chip stock index is about 21 times.