Intel Corporation (INTC.US) regains pricing power: CPU shortages lead to across-the-board price increases, Wall Street says "sell one, sell one."

Intel Corporation (INTC.US) is currently facing not customer loss, but chip shortage. The semiconductor giant has been working hard over the past year to restore the reputation of its central processing unit (CPU) in the personal computer and data center server core component markets. However, this recovery story is now encountering a new bottleneck: the capacity cannot keep up with the pace of orders, and shortages have started to reflect in prices. Media reports show that Intel Corporation has raised the official prices of Xeon server chips and Core Ultra notebook chips on the eve of the third quarter. Wall Street believes that the company has the confidence to continue raising prices without losing customers. Wedbush: Server CPU shortages create pricing space for Intel Corporation Wedbush Securities analyst Matt Bryson pointed out in a client report that the continuous shortage of server CPUs gives Intel Corporation the pricing elasticity to raise prices without affecting demand. He said that the key issue now is not whether Intel Corporation can raise prices, but where the price increases will fall - whether the official prices will rise in sync with the actual purchase prices of OEM manufacturers, or whether significant adjustments will be made in retail and distribution channel prices. Given that server chips account for a larger proportion of Intel Corporation's business, this round of price increases will significantly boost profit growth. If prices generally rise, it means that Intel Corporation has regained pricing power for the first time in many years, reflecting a tense supply situation. CFO: Server CPU revenue growth mainly driven by price increases At the Bank of America Global Technology Conference on June 2, Chief Financial Officer David Zinsner revealed that the company's server CPU revenue grew by about 20%-25% year-on-year last quarter, mainly driven by an increase in average selling price (ASP), rather than an increase in shipment volume. He explained that as the number of cores per chip increases, prices naturally rise; of particular note is that Intel Corporation has also achieved price increases in same-core-caliber chips, a metric that has been declining for many years. Zinsner also said that the company is locking in long-term agreements with customers, fixing prices and purchase volumes to enhance visibility in capacity planning. He added that current demand is enough to support growth this year, next year, and the year after, and that the limiting factor is supply rather than customer willingness - in his words, "today, you can probably sell any CPU you make." AI restructuring demand structure: CPU/GPU ratio reversal Demand itself is being profoundly reshaped by artificial intelligence. Intel Corporation CEO Lip-Bu Tan revealed at the JPMorgan Technology Conference on May 19 that there has been a significant change in the ratio of CPUs to GPUs in AI systems. In training mode, workloads are highly reliant on GPUs, usually with 1 CPU paired with 8 GPUs; in the case of Agentic AI scenarios - where software agents autonomously plan, call tools, and complete multi-step tasks - customer feedback has approached 1:1 ratio, with some cases even reaching 4 CPUs to 1 GPU. During his keynote speech at the Computex Taipei International Computer Exhibition on June 2, Vice President Kevork Kechichian demonstrated the contrast between traditional AI reasoning and Agentic AI workflows: in the traditional mode, the GPU ratio is close to 7:1, while in Agentic AI, the CPU is dominant as agents need to frequently execute tasks such as data retrieval, code execution, and rule verification that CPUs excel at. Stock price target and long-term outlook For Intel Corporation shareholders, the combination of "price increase + supply constraints" is far superior to the previous years of "price reduction to protect volume" erosion of profits. Zinsner stated that the company has advanced the yield qualification time for the 18A process by at least one quarter, which will help speed up chip production and alleviate current capacity constraints. In addition, Intel Corporation has set a long-term financial goal known internally as the "45 rule," which involves revenue growth and operating profit margin totaling over 45%. Zinsner called this a multi-year goal, not achievable in the short term, but cost optimization, stable pricing, and rising demand all point in the right direction. Of course, once additional capacity is released, the ability to maintain pricing power remains uncertain. But at least for now, this chip giant that has struggled to tell a good growth story to Wall Street for many years has a more concise and powerful narrative: demand outpacing supply, with customers willing to pay more rather than leaving. Among the 46 analysts covering Intel Corporation stock, 11 recommend "strong buy," 1 recommend "buy," 32 recommend "neutral," and 2 recommend "strong sell." The average target price is $102.87, below the current stock price of $112.