"Our upgrade is primarily based on our view that the company is exposed to the right end markets for this pandemic - namely, notebooks and data center," Analyst Chris Caso said in a note to clients.
"While we expect the current surge in notebook sales to be relatively short-lived and roll off in the back half of the year, cloud and service provider data center spending is expected to remain strong through 2020."
The analyst also said that "given the relatively rapid change in market conditions - which both are set to benefit Intel in the near term - we feel our underperform rating was no longer appropriate."
Caso said commercial notebook demand now appeared very strong as many employees are working from home due to the coronavirus pandemic. While this demand will benefit first-half revenue, Caso considers this temporary.
He raised his June quarter estimates to reflect the stronger demand in notebooks and the data-center group.
In additional, Caso also said that the Santa Clara, Calif., company's possible move to more outsourcing has the potential to improve cash flow and capital intensity.
Caso also said, however, that longer-term structural issues- particularly Intel's process-technology disadvantage - are likely to persist at least well into 2022. This kept him from becoming more constructive on the stock.
Caso increased his 2020 revenue estimate to $73.9 billion, above his current full-year guidance of $73.5 billion as stronger second-quarter and and second-half dynamics more than offset a weaker first quarter.
His 2021 estimates remain essentially unchanged.
At last check Intel shares were 4.4% higher at $56.52.