Intel shares have reached a new all-time high, a feat not seen since the dot-com era. Trading above $82, the chipmaker's stock surpassed its previous split-adjusted record, marking a strong recovery against rivals like Nvidia and AMD.
The rally follows a positive first-quarter earnings report, with revenue up 7% year-over-year to $13.6 billion. While reporting a GAAP loss per share, adjusted earnings of $0.29 beat expectations. Intel projects second-quarter revenue between $13.8 billion and $14.8 billion.
Just a year ago, Intel stock hovered near $20, burdened by manufacturing issues and perceived missed AI opportunities. The stock has since quadrupled, with its market capitalization now around $375 billion.
The primary catalyst is artificial intelligence. Intel's Data Center and AI segment saw 22% growth, driven by demand for Xeon CPUs in AI inference workloads. Supply constraints even led Intel to sell previously shelved chips.
This comeback is underpinned by solid revenue, better-than-expected earnings, and a reassessment of CPUs' role in AI infrastructure. While Nvidia leads in AI accelerators, Intel is positioned to capture demand for CPUs in AI, cloud, and enterprise deployments.
Intel's foundry business also shows signs of progress, with sequential revenue growth driven by advanced process technologies like Intel 3 and 18A. Although external foundry revenue remains modest at $174 million, the company's internal manufacturing advancements are a key part of its recovery narrative.
Strategic importance to the US government, which holds a significant stake, further bolsters Intel's position amid efforts to reduce reliance on overseas semiconductor supply chains.
However, high expectations accompany the stock's surge. Investors are pricing Intel as a credible AI and manufacturing recovery story, leaving less room for error. Competition remains fierce, and any slowdown in AI CPU demand or stumbles in manufacturing execution could impact gains.
Valuation remains complex, with GAAP losses distorting traditional multiples. The investment case hinges on Intel's ability to translate higher revenue and demand into sustained margin expansion and attract major external foundry customers for its advanced process nodes like 18A. Margin improvement and profitability are critical to supporting its current market valuation.