Intel Corp. has quickly become one of the hottest stocks in the S&P 500 Index, thanks to an eight-day surge that has added more than $100 billion to its market value.
A wave of positive news over the past two weeks has reignited investor excitement. Many now believe the chipmaker can achieve a dramatic turnaround after years of underperforming due to fears it had lost its edge in semiconductor manufacturing. Shares just had their best week since January 2020 and have soared 51% over the last eight trading sessions. This is the most on record for any similar period – quite an accomplishment for a company that went public in 1971.
“It is clearly no longer on life support,” said Thomas Hayes, chairman and managing member of Great Hill Capital, which manages about $1 billion in assets and owns Intel stock. The latest gains started with an early April announcement that Intel agreed to pay $14.2 billion to buy back half of a plant in Ireland from Apollo Global Management. This move was seen as proof that the company is making progress in its turnaround. “It sees itself in expansion mode, not survival mode,” Hayes added.
The shares received another boost last week when Intel announced it would join Elon Musk’s Terafab project. This project aims to develop semiconductors for Tesla Inc., SpaceX, and xAI. That was followed by a commitment from Alphabet Inc.’s Google to use future generations of Intel’s Xeon processors in data centers.
This rally has pushed the stock’s gains for the year to 69%. This comes after an 84% jump last year, sparked by investments from Nvidia Corp., SoftBank Group Corp., and even the US government. The government’s stake is now worth roughly $27 billion, more than three times its original investment and slightly less than what the US spends annually on childcare services.
“The Intel narrative keeps accelerating,” Melius Research analyst Ben Reitzes wrote in a note to clients on Friday as he raised his price target on the stock for the third time this year. “The idea around Intel’s value as a strategic foundry asset seems to be validated daily.”
To be clear, the stock is still down about 8.9% from its 2020 high. In contrast, the S&P 500 has gained over 100%, partly fueled by a surge in major AI chipmakers like Nvidia, Broadcom Inc., and more recently Micron Technology Inc.
Wall Street is also far from convinced that the worst is over for Intel. Of the 52 analysts tracked by Bloomberg who follow the shares, only 10 have buy ratings and six have sell ratings, which is more than double the average for an S&P 500 stock. Intel’s recommendation consensus – a measure of its buy, hold, and sell ratings – stands at 3.15 out of five, the weakest among chipmakers. The stock also trades at a roughly 27% premium to the average analyst price target, suggesting it has risen too far, too fast.
