Intel finally gets some love. 

Intel's  (INTC) - Get Report  improving financial constraint and its recent pacts with Facebook (FB) - Get Report  and Alphabet's (GOOGL) - Get Report  Waymo bode well for the chipmaker's turnaround, BMO Capital analyst Ambrish Srivastava suggested in a Monday report. 

Shares of Intel Corp. gained 0.6% to $44.69 Monday late morning, after Srivastava raised his price target from $37 to $58 and upgraded his rating on the stock from market perform to outperform. Intel has had a renaissance this year, with shares gaining 24%. The company topped earnings forecasts last Thursday, fueling a 7.4% rise on Friday.

"The single biggest reason for our change in thinking is our belief that Intel is finally addressing a facet of the business model/company that we have struggled with in the past, i.e., lack of financial discipline, whether it comes to capital allocation, making acquisitions that have made little sense at least to us over the years, or simply keeping its operating model in check," Srivastava wrote. The analyst downgraded Intel two years ago following its $16.7 billion purchase of Altera, which makes re-programmable chips for data centers and Internet of things devices. At the time, Srivastava questioned Altera's growth rates and the acquisition's impact on Intel's capital returns.

Intel's pledge earlier in the year to reduce spending to 30% of sales by 2020 resonated with Srivastava, even though he has concerns about the $15.3 billion price tag earlier this year for advanced driver assistance technology company Mobileye. According to UBS, the price represented 21 times consensus 2019 projected sales and 41 times projected earnings.

"While we still bristle at the multiple Intel paid for Mobileye, we believe if [Intel] can lower its opex to the 30% target as the company has promised it would, the earnings potential is certainly not reflected in the shares today," Srivastava wrote.

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In addition to Intel's cost controls, the analyst suggested that some of its partnerships in self-driving cars and chips for data centers are promising. 

During the company's third-quarter earnings call on Thursday, Intel CEO Brian Krzanich touted Intel's collaboration with Waymo's fleet of self-driving Chrysler (FCAU) - Get Report Pacificas. "With three million miles of real-world driving, Waymo cars with Intel technology inside have already processed more self-driving car miles than any other autonomous fleet on the U.S. roads," he said.

Meanwhile, Facebook is helping Intel tweak its upcomng Nervana artificial intelligence chips. Intel acquired Nervana for more than $350 million last year to compete against Nvidia (NVDA) - Get Report  in machine learning. "Intel has made a series of acquisitions in the market, and we believe Intel's relationship with Facebook with respect to working on the architecture of the Nervana chip is noteworthy," Srivastava wrote. 

Intel will begin shipping the Nervana neural network processors this quarter, Krzanich told investors in the third-quarter call. "Facebook is working in close collaboration with us, sharing their technical insights as we bring this new generation of AI hardware to market," he said.

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