This May Be the Next Big Catalyst for Intel Stock

Intel (NASDAQ: INTC) has been on an astounding run on the stock market over the past year. Shares of the semiconductor giant have gained a whopping 427% during this period, but recent stock price action suggests that investors may be having second thoughts about its prospects.

Shares of Intel reached a 52-week high on May 11. However, they have slipped by more than 16% since then. Concerns regarding Intel's expensive valuation, the potential entry of Nvidia into its turf, and the recent dip in semiconductor stocks have weighed on its stock price.

However, Intel stock could get a solid boost following a new development that reinforces the company's turnaround story. Let's take a closer look at a potentially major win scored by the chipmaker that could supercharge its stock once again.

Image source: Intel.

Intel's foundry business may have landed a huge contract

Technology-focused business publication The Information (via Reuters) reports that Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google has placed an order for manufacturing over three million units of its Tensor Processing Units (TPUs) in 2028 with Intel's foundry unit. These are Google's in-house custom AI processors, in high demand from hyperscalers and AI companies for their price-to-performance advantage over traditional graphics cards for inference workloads.

Google has secured notable contracts with the likes of Anthropic, Meta Platforms, and even Apple to deploy its TPUs in huge numbers to handle AI workloads in data centers. Anthropic, for instance, announced in October 2025 that it will be deploying up to one million Google TPUs in 2026 to power more than 1 gigawatt (GW) of data center capacity.

Not surprisingly, the tech giant needs to produce enough chips to meet strong demand for its TPUs. With foundry giant Taiwan Semiconductor Manufacturing recently warning that "it will be a long time before we can meet customer demand," it is easy to see why Alphabet is now considering alternative options to manufacture enough chips.

What's more, The Information adds that even Nvidia is evaluating Intel's 18A process node to see if it can be used to manufacture a processor that can combine four of its graphics cards into a single platform. Though Nvidia hasn't placed an order with Intel yet, there are clear signs that Intel's foundry business is gaining impressive momentum.

The company has already landed a major foundry customer, Tesla, to manufacture chips for the Terafab project. Even Apple is reportedly in talks with Intel to make chips. All this suggests that Intel's foundry business has the potential to grow nicely in the long run.

But is the stock worth buying now?

Intel's foundry business unit generated $5.4 billion in revenue in the first quarter of 2026, up 16% over the prior year. The unit accounted for 40% of Intel's top line, and it outpaced the 7% jump in the company's overall revenue.

The potential growth in the list of foundry customers can supercharge the company's growth. It is worth noting that analysts are already anticipating solid bottom-line growth from Intel.

Data by YCharts

The new business that the company is reportedly getting should ideally ensure that its robust earnings growth continues beyond 2028. Of course, the stock remains expensive at 141 times forward earnings, but it may be able to justify that valuation by delivering faster-than-expected earnings growth.

So, investors holding this AI stock can continue to do so, as the improving momentum of Intel's foundry business can give it a shot in the arm and send it soaring in the long run.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Intel, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.