Intel Stock Surges Ahead of Earnings
Intel shares jumped 10% on Wednesday, reaching their highest level since January 2022. The rally continues a strong run that lifted the stock 84% last year and 145% over the past 12 months. Investors are optimistic ahead of Intel’s quarterly earnings report, set for Thursday after the market closes.
Strong Demand for Server Chips
Much of the optimism comes from Intel’s latest server chips. Analysts say demand is rising as companies invest in AI infrastructure. KeyBanc upgraded Intel to a buy earlier this month, noting that the company may be sold out of server CPUs for the year. Higher prices could follow.
“We expect outsized data center demand from hyperscalers this year to be a significant tailwind,” the KeyBanc analysts wrote. Their price target for Intel is $60, compared with a current price of around $53.
Intel Foundry Gains Attention
Intel’s foundry business could start winning orders and compete with Taiwan Semiconductor Manufacturing Company as the second-largest chip foundry. Intel’s 18A manufacturing technology rivals TSMC’s 2-nanometer process.
The U.S. government invested $8.9 billion last year, becoming Intel’s largest shareholder. NVIDIA, a top AI chip maker and potential customer, also invested $5 billion and is integrating Intel CPUs into its AI systems.
Leadership Changes and Cost Cuts
Intel CEO Lip-Bu Tan, appointed in March, has restructured leadership, cut costs, and reduced staff. These moves aim to strengthen Intel’s competitive position in AI and data center chips.
Earnings Expectations
Analysts expect Intel’s fourth-quarter revenue to drop 6% year over year to $13.4 billion. However, sales from AI and data center chips are projected to rise nearly 29% to $4.4 billion. Other chip stocks, including AMD and Micron Technology, also rose about 6% on Wednesday.
