3 Reasons to Buy Intel Stock Before 2027

Shares of Intel (NASDAQ: INTC) are up about 180% over the past year, as of Oct. 12, reflecting growing demand for its chips for artificial intelligence (AI) workloads.

The stock is more expensive than it was a year ago, but the prospect of sustainable revenue growth from AI leaves room for further gains over the next several years. "AI is driving unprecedented demand for compute, and as we continue to execute, Intel is well-positioned to capture sustainable growth across our CPU franchise, ASICs, advanced packaging, and vast wafer foundry network," CEO Lip-Bu Tan stated in the 2026 second-quarter earnings report.

Here are three reasons the stock is a buy heading into 2027.

Image source: Intel.

1. Strong execution is producing momentum in financial results

Intel has topped its own financial expectations for seven straight quarters. Beating guidance repeatedly shows the company is executing well against its goals and managing its factories and costs, which can support a higher stock price over time as investors gain confidence. Here are the key highlights from the Q2 earnings report that point to building momentum in the business:

• Revenue rose 25% year over year to $16.1 billion -- the company's strongest growth in more than 15 years.
• Non-GAAP gross margin (the share of revenue left after production costs) reached 41.8%, more than 12 points higher than a year earlier.
• Adjusted earnings per share of $0.42 more than doubled the guidance of $0.20, and reversed a loss of $0.10 in the year-ago quarter.

Higher revenue, better manufacturing yields (more working chips per wafer), and stronger average selling prices drove the strong results, with data-center and AI sales growing 59% to $6.3 billion. AI-related businesses made up roughly 70% of Intel's total revenue in the quarter.

CFO David Zinsner said the near-term goal was to get gross margins "comfortably into the 40s" every quarter -- implying the potential for more gains over its Q2 gross margin. Overall, the prospect of expanding margins is a positive for the stock heading into 2027.

2. AI is driving more demand for Intel's processors than it can supply

AI will need a massive number of central processing units (CPUs), as well as specialized accelerators and graphics processing units (GPUs). CPUs have proven more effective at handling orchestration, data movement, and storage around AI training and inference. The growing use of AI agents (software that performs tasks autonomously) will put more strain on existing compute capacity and is a long-term tailwind for Intel.

Intel faces growing competition in the CPU market from Advanced Micro Devices and Nvidia. But all these companies should continue to post robust growth, since demand for CPUs continues to outrun supply.

AI agents require a four to six times increase in CPU requirements, which is leading to higher core counts and more stable pricing. Beyond servers, Intel sees further opportunities in edge computing and physical AI systems such as industrial equipment and robotics.

These opportunities support analysts' expectations that Intel's revenue will increase by 21% in 2027, reaching $78 billion.

3. Manufacturing progress is opening additional growth opportunities

Intel's foundry efforts (making chips for other companies) and advanced packaging technology, which connects multiple chips into more powerful processing systems, are showing progress. The 18A process is in high-volume production. Better yields and execution in ramping new technologies mean Intel can produce more chips at lower cost, which improves margins and can attract outside customers for Intel's foundry.

Management sees its advanced packaging business potentially reaching billions of dollars in revenue with attractive margins. Revenue is expected to ramp more meaningfully in the second half of 2027 and can also open the door to larger foundry deals.

Intel's foundry posted a Q2 operating loss of $2.1 billion, although the loss narrowed by $348 million over Q1. The foundry's persistent losses have been an overhang on the stock in recent years, but management is working to bring this business to breakeven by the end of 2027 or into 2028. Narrowing losses at Intel Foundry could support a higher stock price in 2027.

Intel's shares are not cheap, trading at a forward price-to-earnings ratio of 67 on 2026 earnings estimates. Even so, accelerating growth, expanding margins, and long-term opportunities in physical AI could still support excellent returns for investors in 2027 and beyond. The forward multiple drops to 49 on 2027 estimates, with analysts expecting 69% annualized earnings growth in the next several years.

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.