Intel jumps 8% on BofA double upgrade. Cramer calls it his No. 1 chip stock

Intel shares surged nearly 8% Thursday after Bank of America issued a double upgrade, lifting the stock to buy from a sell-equivalent rating and raising its price target to $135 from $96. The call marks a sharp turn in Wall Street sentiment toward the chipmaker, which has been rebuilding its business under CEO Lip-Bu Tan.

Jim Cramer told CNBC's Morning Meeting that Intel is now his favorite name in the semiconductor space, ahead of Nvidia. "If you don't own Intel, please buy it," he said. "Intel's my No. 1 name, not Nvidia." Cramer argued that Nvidia, the leading AI chip maker, has become a source of funds for investors raising cash ahead of the SpaceX IPO. Intel does not face that same selling pressure, he said.

The BofA upgrade rests on two pillars: Intel's central processing units and its contract manufacturing business, Intel Foundry. Analysts led by Vivek Arya see Intel capturing about 25% of a server CPU market worth $170 billion by 2030, up from a prior estimate of $135 billion. That would put Intel's server CPU sales at $40 billion that year, well above the $32.5 billion Wall Street consensus for the company's data center and AI segment, per FactSet.

The CPU thesis has gained traction as AI computing shifts from training models to inference – the stage where models answer queries and react to user demands. Agentic AI systems, which complete tasks autonomously, require large numbers of CPUs. Intel's April earnings showed booming demand for CPUs, a reality check for investors who had focused on Nvidia's GPU dominance.

Intel Foundry is the second leg of the story. Taiwan Semiconductor Manufacturing Co., the largest contract chip maker, is running near full capacity, and expanding takes time. BofA sees Intel Foundry stepping in as an alternative. A recent partnership with Cadence Design Systems, focused on Intel's upcoming 14A manufacturing process, boosted analyst confidence. Cadence makes chip-design software; Tan was its CEO from 2009 to 2021 before taking the top job at Intel in March.

Tan has prioritized improving manufacturing quality at Intel Foundry, which had been a drag on profitability. He told Cramer last month that the business had real momentum toward securing external customers. Potential wins include manufacturing and packaging work for Apple, MediaTek, and Elon Musk's Terafab project. The Wall Street Journal reported last month that Intel and Apple have a preliminary agreement in place. Intel said in April it was joining the Terafab initiative.

"Since Tan took over at Intel, I think there's been a gradual buildup of confidence in Intel's ability to execute, and that is coming at a time when the semiconductor industry is dealing with a lot of supply constraints," Arya said on CNBC. The big risk, he added, is whether Intel can consistently deliver at a level comparable to TSMC, "which is not easy to do."

Cramer is betting on Tan. "Lip-Bu Tan is a miracle worker, and I'm with him all the way," he said. "This stock goes up dramatically."

Intel's Alpha Score sits at 38/100, labeled Mixed, reflecting the turnaround still in progress. The stock page is at INTC stock page. For broader context on the sector, see stock market analysis.