Intel Is Up 168% in 2026 and Analysts Say Earnings Could Jump 159% This Year. Here's Whether Intel Is a Bargain or a Trap at These Levels

Shares of Intel (NASDAQ: INTC) have surged nearly 168% so far in 2026. Analysts also expect the company's earnings per share to jump by more than 159% year over year to $1.09 in fiscal 2026.

That combination is making the stock appear tempting. But after such a huge rally, investors need to ask whether Intel stock is still a bargain or whether the market has already priced in too much turnaround success.

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Improving financial and operational performance

Intel's first-quarter fiscal 2026 performance (ending March 28, 2026) was impressive. Revenue rose 7% year over year to $13.6 billion, while non-GAAP earnings per share were $0.29. Non-GAAP gross margin improved by 1.8 percentage points year over year to 41%, and non-GAAP net income rose 156% year over year to nearly $1.5 billion.

Intel is also witnessing solid demand for its Xeon server CPUs, with demand outpacing available supply. Artificial intelligence (AI) data centers depend on CPUs to direct work to accelerators, support real-time inference (the deployment of AI models), and handle the memory, security, and networking tasks behind large AI systems. Management said training systems generally use about seven to eight GPUs for every CPU, but that ratio may move closer to three or four GPUs for every CPU as workloads shift toward inference. Agentic and multi-agent workloads could require even more CPUs. If that shift continues, Intel could benefit from AI infrastructure growth without becoming the next Nvidia.

Intel is also getting better visibility into future data center demand. In April 2026, Alphabet's Google expanded its multiyear partnership with Intel to use Xeon CPUs for AI inference and broader cloud workloads. Management said Google was one of multiple long-term agreements signed in the quarter. These deals typically give Intel a clearer view of how many chips customers may need and at what price over the next three to five years. Intel's Xeon 6 CPU was also selected to help coordinate and support Nvidia's DGX Rubin NVL8 AI system.

Intel's foundry ambitions are also becoming more credible. The company's new PC processor platform, Core Ultra Series 3, is built using its advanced chipmaking technology, the Intel 18A node. These 18A-based products are already ramping in full-volume production, while 18A yields (usable chip output from the process) are running ahead of internal expectations. This supports Intel's manufacturing comeback story, but the company still must prove that 18A can scale reliably and profitably.

Investors shouldn't ignore the risks

Intel Foundry generated $5.4 billion in revenue in the first quarter but still posted an operating loss of roughly $2.4 billion. Intel is also loss-making on a GAAP basis, with a first-quarter GAAP loss of $0.73 per share.

Management expects PC demand to weaken in the second half of 2026, and the full-year PC unit market to decline year over year by a low-double-digit percentage. Hence, Intel's turnaround may depend more on data center demand and 18A execution. The 18A manufacturing technology is also negatively affecting the company's gross margins during its early ramp.

Against this backdrop, Intel appears neither a clean bargain nor a pure trap. The company is trading at 8.3 times sales, significantly above its three-year average price-to-sales multiple of 3.3 times. Hence, while business is clearly improving, the stock already reflects a lot of turnaround success that Intel still has to prove.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Intel, and Nvidia. The Motley Fool has a disclosure policy.