Intel’s Strong Demand for Processors Drives Stock Surge
In the first quarter, Intel experienced unexpectedly high demand for its central processors from AI service companies. Remarkably, they sold chips previously deemed unsellable, which contributed to a significant turnaround, boosting the company’s stock dramatically on Friday.
Shares rose over 20% during intraday trading, reaching $83, a level not seen since the dot-com boom in 2000. This increase elevated the company’s market capitalization to over $416 billion.
The stock reached an early trading peak of $85.22, setting a new record.
Competitors like AMD and Arm also saw their stocks rise by more than 11%. There’s a growing belief that inference—the method AI uses to respond to user inquiries—could bring central processing units back into focus, especially after years of being eclipsed by graphics chips tailored for AI training.
Nvidia, the dominant player in the graphic chip sector and a key player in the AI market, is noticing these changes. The company recently announced its first central processing unit, marking a shift into a territory previously left to competitors.
Nvidia’s shares increased by over 1% on Friday, reflecting this evolving landscape.
Following Intel’s better-than-predicted first-quarter performance, at least 23 brokerages revised their price targets upwards. HSBC highlighted a surge in demand for Intel’s Xeon server CPUs used in AI data centers, noting the stock now has a median price target of $75, up significantly from $46.50 just a month ago.
Intel’s CFO, David Zinsner, indicated that rising prices and limited supply in the first quarter influenced expectations, as the company had to tap into its finished product inventories to sell more chips than anticipated.
Interestingly, Intel capitalized on either outdated or lower-quality products that had been shelved. According to Zinsner, working with customers proved beneficial, although he expressed uncertainty about whether this would continue into the second quarter.
With Friday’s gains, Intel shares have surged over 120% this year, following an impressive 84% rise last year. This remarkable recovery follows years of setbacks under CEO Lip Vu Tan.
The current trading value of Intel stands at about 90 times its projected 12-month earnings, which is notably higher compared to AMD’s 37 times and NVIDIA’s 22 times.
Recently, Intel marked a significant step in its contract manufacturing strategy by securing Tesla as a client for its new 14A chip manufacturing process. This aligns with Elon Musk’s plans for a Terafab AI chip complex.
A technology analyst, Bob O’Donnell, noted that if Intel’s foundry efforts begin to contribute meaningfully by 2027, it could indicate that the company’s turnaround is truly successful.
