Intel jumps up to 6% on New Street upgrade, then agrees to buy quantum software firm Classiq

INTC rallied on Monday, October 26, after New Street Research analyst Pierre Ferragu upgraded Intel to Buy from Neutral and set a $125 price target. The stock traded up 6% to $91.82 in the early afternoon and closed up 4.04% at $90.47, a level from which Ferragu's target implies roughly 38% upside.

The thesis rests on server CPUs. "Agentic AI is driving a sustained increase in server CPU demand, with supply constraints set to persist for years," Ferragu wrote. He expects Intel to ramp server capacity by over 50% in 2027, sees Intel's server CPU sales reaching $50 billion by 2030 in a market above $220 billion, and estimates Intel can earn $7.10 per share by then. Notably, Yahoo Finance reported that New Street's model has Intel's share of that market falling to 20% to 25%, so the call is about a growing pie, not regained dominance. Chip peers moved too: AMD and NVDA each gained about 3%.

The second piece of news came after the bell. At 4:30 PM ET Intel announced a definitive agreement to acquire Classiq, a quantum computing software provider used by dozens of global enterprises, in a move CEO Lip-Bu Tan said turns Intel's Quantum Computing Group into a full-stack quantum computing business (Intel). Intel did not disclose terms, and the deal is expected to close in the first half of 2027, subject to regulatory approvals. Because it landed after the close, the acquisition did not drive Monday's move.

The near-term test arrives quickly: Intel reports third-quarter results on Thursday, October 29, after the close, with consensus EPS at $0.40. Investors may look for evidence of server CPU tightness and capacity additions in data center commentary, and for any detail on how Classiq fits Intel's quantum roadmap. The upgrade also stands against a cautious backdrop, with RBC, Susquehanna and TD Cowen all reiterating neutral-equivalent ratings in the prior week.