Intel's AI Bet Is Finally Paying Off -- Is It Time to Reconsider This Stock?

Intel (NASDAQ: INTC) was once at the top of the semiconductor industry. But after arriving late to the AI boom, losing its technological edge to rivals like Advanced Micro Devices and Taiwan Semiconductor Manufacturing, and stumbling out of the gate in the competitive foundry business, its dominance turned into a sobering lesson in how quickly even the best chip companies can fall.

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Lately, though, a string of wins suggests Intel's AI bet is finally starting to pay off, raising a fair question: Is it time to reconsider this stock? The fact is, revenue is improving, foundry partnerships are stacking up, and investor confidence is clearly back.

Still, headlines don't tell the whole story. To see whether Intel's momentum is real, investors need to look at where the company actually stands in AI and what's driving this move.

From $40 to $130 in half a year? How?

Intel's stock price action has been hard to ignore. Shares are up more than 230% year to date and 484% over the last 52 weeks, and the stock recently pushed through $140 to a new all-time high.

That kind of rally doesn't happen for just one reason. Intel's cost-cutting is starting to show up in the numbers, and its renewed focus on AI is catching investors' attention.

But the biggest contributors have been partnerships with major AI players. In April, Intel announced a deeper collaboration with Alphabet to expand the use of its Xeon CPUs and custom IPUs for AI workloads.

Around the same time, Intel joined the Terafab project as a strategic partner alongside Space Exploration Technologies and Tesla, contributing design, fabrication, and advanced packaging capabilities. Intel is set to serve as a key manufacturing partner.

Is it ambitious, like perhaps one of Elon Musk's projects? Absolutely. But SpaceX and Tesla are willing to spend real money to try, and that's exactly the kind of business and validation Intel has lacked in recent years.

That brings us to the biggest catalyst behind the stock's move: the foundry business.

Foundry generated $5.4 billion in revenue in Q1

For years, Intel Foundry was viewed as a giant money pit.

Intel poured tens of billions into advanced manufacturing capacity, process technology, and fab expansions, while the segment reported multibillion-dollar operating losses. Investors were asked to be patient, even as the losses kept piling up.

Now, the narrative is shifting.

As mentioned earlier, Foundry's latest quarterly revenue is becoming a meaningful part of the business. It suggests Intel no longer has to rely solely on selling its own processors. It can also manufacture chips for other companies. And with the AI boom still in full swing, hyperscalers are spending billions to secure leading-edge silicon. That gives Intel a chance to capture a piece of a market it entered late.

Operating losses are also in the billions

To be clear, Foundry is still unprofitable. In the first quarter of FY 2026, the segment reported an operating loss of about $2.44 billion , with Intel remaining in the red on a GAAP basis. Net loss also ballooned more than 350% year over year.

Nobody expected Foundry to flip to profitability overnight, though. The more important point is that revenue is moving in the right direction. Partnerships with hyperscalers and AI leaders add credibility, which could translate into a real advantage in contract manufacturing.

If Intel keeps executing on its roadmap, improves yields, and wins a few more high-profile clients, its original Foundry vision could eventually materialize.

Is Intel a buy today?

Intel stock currently carries a buy rating from Wall Street. Still, more analysts are leaning toward a hold as the stock approaches its price target, and that hesitation makes sense.

It's one thing to reinforce the story with partnerships and improve revenue. It's another to turn that good news into steady, durable profits. Investors will need more validation. But at this point, it does look fair to say Intel's foundry bet is no longer just a costly experiment. It's a legitimate path to future growth, and a big reason some investors are taking a fresh look at the stock.

Rick Orford has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Intel, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.