Intel's (INTC) recent $80 billion rise in market capitalization reflects its improved balance sheet, but its outlook faces challenges due to the lack of a discernible artificial intelligence strategy and a "uncompetitive" server CPU, BofA Securities said in a Monday note.

The company has tried to develop or acquire new AI accelerator assets in recent years, but the project "seems to be either in a halt or no longer a focus area", the report said.

Intel continues to struggle in gaining market share against Advanced Micro Devices (AMD) and ARM (ARM) in both personal computers and server CPUs, the note said.

Analysts note, however, that Intel does have some positives, including backing from the US government, partnership with Nvidia (NVDA), and a better gross margin profile going ahead.

BofA lowers the stock's rating to underperform from neutral, but maintains a $34 price target.

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