Following Intel’s (INTC) submission of its annual 10-K report, which includes fourth-quarter results, the performance of its external foundry revenue has caught the eye of Wells Fargo. Analyst Aaron Rakers noted in the report that as of December 27, 2025, Intel’s foundry business revenue reached $4.51 billion, with total revenue for the same period at $13.67 billion. Rakers assigned Intel a “Hold” rating, setting a target stock price of $45. A particularly noteworthy point in the report is that Intel’s full-year external foundry revenue stood at $307 million, with fourth-quarter revenue alone hitting $222 million, a significant increase from $159 million in the same period of 2024. However, Rakers added that part of this growth was attributable to Intel’s sale of a portion of its Altera business to the private equity firm Silver Lake in September 2025. Following the completion of the transaction, Altera is no longer consolidated into Intel’s financial statements, and this change contributed incremental external revenue in the fourth quarter.
In interpreting the 10-K report, Wells Fargo further pointed out that Intel’s server CPU shipments in 2025 increased by 9% year-over-year, but the average selling price declined by 4%. It forecasts that Intel’s Xeon CPU shipments in the fourth quarter will grow by 8% year-over-year, a performance that makes the growth prospects for AMD’s server shipments in the same period appear more optimistic.
As of Friday’s market close, Intel’s stock price plummeted by over 17%, while AMD’s stock rose by more than 2%. Despite AMD’s (AMD) stock having surged over 105% last year, with its market capitalization reaching $407 billion, there remains a divergence in market valuation of the company. According to estimates, this semiconductor giant is currently valued at approximately 11.8 times this year’s expected sales and 36 times expected earnings. When measured against traditional valuation standards, this growth-oriented valuation level might be difficult to regard as a typical “value investment.” However, from a long-term perspective, the current price point might well harbor deeper investment value. In the personal computer and server central processing unit (CPU) markets, AMD is poised to continue gaining market share from Intel. More importantly, the company’s breakthrough potential in the artificial intelligence graphics processing unit (GPU) market is beginning to materialize.
Although top-tier high-performance GPUs remain the core tools for training new models and advancing AI development, hardware that isn’t cutting-edge can also run AI models and offers significant cost-effectiveness advantages. While such solutions may not yield profit margins as high as those from top-end processors, the increasing proportion of AI chip sales is expected to positively impact AMD’s overall profit margin. The AI business could see accelerated growth in 2026. This year, AMD might find it challenging to surpass or match NVIDIA’s performance in the ultra-high-end GPU segment, but this is not a prerequisite for achieving breakthroughs in the AI field. Taking OpenAI, a major client of NVIDIA, as an example, the company announced a significant partnership with AMD last year. Many tech giants are likely to continue their efforts to reduce reliance on NVIDIA’s processors, and AMD’s GPUs provide them with a quick and convenient diversification option. If future financial reports show accelerated revenue growth in the AI business, investors may be willing to assign AMD a higher valuation multiple.
