Deep Dive: Intel Corporation (NASDAQ: INTC): The Intel Bull Thesis

Equity Research Memo | Aria Research Date: May 19, 2026 Current Price: ~$109 | Market Cap: ~$550B Rating: STRONG BUY | 12-Month Price Target $200

Executive Summary

Intel is no longer the same company it was eighteen months ago, and the market is now beginning to realize this. With an extensive history of failed execution and collapsed foundry practices behind them, they have successfully put together a catalogue for the first time that merits a reevaluation. The new CEO, Lip-Bu Tan, is on board with changing their companies structure. Alongside the US government and Nvidia, which have taken an equity stake in Intel. As such, their 18A foundry technology is now commercially shipping products with yield improvements being greater than what their internal projections were at. Advanced packaging is also growing into a $1B+ business, and companies that use external foundries are making significant strides in committing to Intel long term.

This stock has already had its fair share of upside (approximately 400% over the last twelve months) as markets begin to digest the operational data that we have been seeing. The question at hand is whether Intel has already “topped out” or if there is any more upside left in the stock. In terms of a baseball game, I believe we are in the early to middle innings in the Intel bull cycle, with the majority of the remaining catalysts yet to come.

The thesis rests on six pillars: foundry customer commitment, their advanced HBM packaging (EMIB and EMIB-T), the geopolitical “floor” as defined by the U.S. Government’s stake in Intel, the roadmap of 18A and 14A technologies, the Lip-Bu Tan operational reset, and the capital expenditures peak that will lead to an inflection point in free cash flow in 2027 & 2028. Altogether, I believe these pillars create immense upside potential for Intel that some analysts are failing to capture.

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The Setup: Where Intel Stands Today

Intel’s Q1 2026 revenue was $13.6 billion, up 7% year over year. The Data Center and artificial intelligence revenue increased by 22% to $5.1 billion in Q1 2026. The revenue from Intel Foundry services increased by 16% to $5.4 billion in Q1 2026. The revenue from Client Computing remained steady at $7.7 billion in Q1 2026. On April 18, 2026, Intel issued guidance of between $13.8 billion and $14.8 billion for its second quarter (Q2) earnings. The stock moved 24% in one day following Intel’s reporting of its first-quarter results.

While the headline numbers were important, they were much less important than the shift from the bear case on Intel, which is now required to address specific execution failures rather than vague concerns about strategic direction. Before this time, the bear case was simply “that Intel was a melting ice cube.” Today, the bear case is simply that the recovery has already been priced in. As such, these are very different problems for investors to underwrite, indicating a strong narrative shift on Intel.

Three structural changes happened between late 2025 and early 2026 that the market is still digesting:

1. The US government took a 9.9% equity stake in August 2025 at $20.47 per share, funded through CHIPS Act grants. The total government investment now stands at $11.1 billion, with a five-year warrant for an additional 5% stake exercisable if Intel ceases to own at least 51% of the foundry business.

2. NVIDIA invested $5 billion in September 2025 at $23.28 per share, completing the transaction in December after FTC clearance. The deal includes a joint product roadmap covering custom data centre CPUs and x86 SOCs with integrated RTX chiplets using NVLink.

3. Apple has reportedly signed an NDA with Intel and received the 18A-P PDK 0.9.1GA, with Ming-Chi Kuo estimating production silicon shipping in Q2 or Q3 2027 at volumes of 15 to 20 million entry-level M-series chips annually. The Wall Street Journal confirmed a preliminary agreement in early May 2026.

These three developments anchor the bull case in a way that pure operational improvement cannot. The political, ecosystem, and customer signals are now aligned in a way they have not been since the early 2010s.

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Pillar One: The Foundry Customer Commitment Ramp

This is one of the least discussed legs of the thesis since the financial impact will take time to come from this announcement cycle. The external foundry revenue in Q1 2026 was only $174 million. As such, that is a very small percentage of the total foundry revenue at $5.4 billion. Meaning, the majority of foundry revenue comes from internal chip production.

The number bulls should be watching is different. On the Q1 2026 earnings call, Tan disclosed that Intel signed multiple long-term agreements in the quarter for volume and pricing of server CPUs and ASICs, typically lasting three to five years, with several confidential at customer request. The publicly named deal was a multi-year LTA with Google covering both Xeon CPUs and ASICs. NVIDIA also selected Xeon 6 as the host CPU for its DGX Rubin NVL8 systems. The previously confirmed Microsoft custom 18A chip deal remains in development, with Amazon’s AI fabric chip and the Terafab deal with Tesla, SpaceX, and xAI rounding out the publicly disclosed customer set.

CEO Tan has stated that design agreements from external foundry customers will start in the second half of 2026 and will expand throughout 2027. As well, CFO David Zinsner reiterated this, stating that “signals” from customers (outside) will “become more concrete” during the second half of 2026. While any individual name is less important than the overall trend, multiple foundry customer wins accumulate. Winning the first major customer is difficult because you are asking an external customer to invest in a multi-year product development cycle based upon new, unproven manufacturing technology. The Apple deal, if it converts from a preliminary agreement to a signed wafer agreement, would be the validation that unlocks the next wave of customers waiting on the sidelines.

The financial inflection will occur when the company’s external foundry revenues scale from under $200 million on a quarterly basis to $1 billion or more per quarter. This would cause the foundry portion of the business to go from being a $2.4 billion per quarter money pit with no operating income to approximately break-even. In theory, this could happen as soon as the fourth quarter of 2027 or the first quarter of 2028; however, investors usually price it in around twelve to eighteen months before it actually happens.