Intel Stock's Rare Surge: What’s Driving the Rally and Is It Worth Buying in 2026?

TradingKey - Intel Corporation (INTC) is a designer and manufacturer of central processing units (CPUs), system on chip (SoC) designs, and areas of application/numerous other compute solutions for manufacturers and operators of personal computing devices (PC), cloud service providers (CSP), governmental agencies, and corporate/enterprise users. Much of the scaling of CPUs for use in AI applications has gone unnoticed. 

With AI workloads fueling the growth of GPUs in the market, significant demand for server CPUs is now being created as the use of AI agents and the use of AI processing for inference purposes becomes more commonplace. 

As a result, it provides a second opportunity for Intel to enhance its footprint in the AI infrastructure sector through general-purpose compute and custom-designed computing infrastructure chips, along with its previously established position through the use of network and accelerator-based computing infrastructure technologies.

How Intel Stock Caught Fire

Intel, Inc. shares have skyrocketed over the last eight trading days, which marks one of its best stretches in nearly 40 years after a lengthy period filled with questions about management's ability to execute, with investors now becoming more optimistic about the company's role in artificial intelligence-related technologies.

The good news is due to a number of reasons, including: much tighter human and machine supply relative to demand for Server CPU; several new and expanded partnerships between Intel and various data center operators in North America; and the market evolving toward greater acceptance of Intel as it relates to building out Artificial Intelligence.

According to Seaport Research analyst Jay Goldberg, "six months ago investors were asking whether or not Intel would be around in five years," but he now believes that "Intel has effectively secured itself a new opportunity going forward." In addition, Goldberg noted that he believes that both demand for Server CPUs as well as supply of Server CPUs will be favorable to Intel.

The attention around projects at Intel has increased the level of expectation. Intel has also expanded its partnership with Alphabet (GOOGL) to continue using Xeon processors to operate the entire Google Cloud; for example, they are utilizing Xeon processors to conduct AI/Inference/General Processing workloads, while also sharing resources and co-developing ASICs to serve any CPU/Accelerator combination within the existing data centres.

Intel has partnered with Terafab, companies associated with Elon Musk, such as Tesla (TSLA), xAI, SpaceX, and others. This project is still in the planning stages; however, as the project unfolds, Intel is likely to receive manufacturing work related to semiconductor chips. This will be beneficial to customers who seek to diversify their supply chain by providing additional opportunities to seek alternatives from a single source/vendor for hardware purchasing programs.

TD Cowen raised their price target for shares of Intel to $60 from $50 while maintaining their buy rating on the stock, even though the stock has appreciated dramatically during the past year (+216 percent).

Can Intel Bounce Back with Strategic Acquisitions?

Intel's financial performance will not be judged on the basis of past performance but on the potential for future success. 

Intel's acquisition of Apollo's 49% share of the Ireland Fab 34 joint venture for a total purchase price of $14.2 billion, paid by a mixture of cash and the $6.5 billion bridge loan to the time of refinancing, when appropriate, has been an intentional act over time. With this acquisition, all manufacturing in Ireland is then directly controlled by Intel and demonstrates renewed confidence in the long-term future use of those factories.

Both joint ventures and additional factors concerning both product cycle timing and production/manufacturing processes must be considered when discussing the overall product development life cycle.

Based on analyst estimates from TD Cowen, in Q4 2025, Intel will only sell approximately 20% of their 3rd generation x86 server CPUs (performance-focused products) vs. the corresponding units sold, thus continuing the dominance of their 10th/7th generation x86 server CPUs for the time being.

The company indicated that in H2/2025, they typically would anticipate some improvement from their Diamond Rapids product line (they have indicated they will make some progress on these types of products in Q2), which are available to be available for the second generation of the Platinum Line (the product family structure for the Diamonds is slightly different than the products being sold).

The Coral Rapids product line is expected to completely reset the competitive landscape for x86 server CPUs (and the server family) when it gets to market in H2/2026 OR later; however, they will likely compete on much lower price points than what is being sold today.

At this time, due to the growing demand for server CPUs, there have been product shortages created by excess demand that will positively affect the existing installed base of Intel CPUs. 

According to Seaport's Goldberg, it is expected that during the first part of the next calendar year, Intel will have difficulty in supplying products in this area with more concrete opportunities to occur as manufacturing capabilities increase and transition into production beginning the second half of 2026. This excess demand is also a result of the requirement for Intel to attract new customers who need leading-edge and specialized manufacturing through the foundry business.

Why the rally happened when it did

Investors quickly re-pricing Intel's option value likely explains much of the move in the stock price. Investors now see the evolving role of CPUs within AI-centric data center (e.g., Google’s usage of Xeons and custom-produced IPUs) environments, as well as Intel's potential involvement in becoming a Terafab manufacturer, as helping to define Intel's importance to markets beyond just traditional PC and server platforms.

Moreover, the CPU roadmap for Intel's server line provides strategic insulation from potential limiters on third-party capacity that are prevalent, currently, in many chip makers that rely upon TSMC for manufacturing capacity. Additionally, when you combine a strong investor sentiment with a curtailed supply versus demand situation, you will likely see drivers of changing stock prices that are not reflected in revenue reports (which will eventually show future performance).

2026 Outlook: What Needs to Break Right

How well Intel executes as an organization will determine if it can continue its current momentum into 2026. Key to moving forward will be the launch of additional new generation high-end server CPUs, converting partnership contracts to recurring purchases of CPUs, and improving supply chain constraints while still maintaining pricing power over these critical products.

If the Diamond Rapids launch is successful and available from the supply chain, it would give Intel a leg up on taking advantage of many existing supplier shortages and converting that into a financial story in 2022 for the company. Successful Foundry sales would give Intel another line of growth and help justify the hundreds of millions of dollars already invested in its manufacturing capabilities.

If Intel delays the launch of other higher-performance CPUs based on newer processes or sees slower penetration for next-generation CPUs into the market, this could allow competitors to gain market share while the overall market is normalizing. The company has indicated that they are hopeful of a competitive advantage with the Coral Rapids chip when it launches in 2027. Therefore, 2026 should be viewed as transitional in nature rather than a hard stop to the initiatives outlined above.

Is Intel's Surge Justified, or Is It Overvalued?

The current stock market rally has shifted attention back to valuations. According to TD Cowen, traders will find that Intel currently trades at approximately 63x 2027 EPS (earnings per share), which is about 4x more than NVIDIA (NVDA). 

The stock appears to be overbought as visible by price momentum indicators such as RSI. Additionally, many fair value methodologies continue to indicate that the stock is trading at a premium to intrinsic value estimates. 

The gap described above does not negate the fact that Intel has made strides operationally; it simply reduces the margin for error and increases the sensitivity to any deterioration in execution. 

Since Intel has already gained 51% in the first 8 days of the current rally, traders need to be cautious when acting on post-event announcements; thus, if they are looking for their next point of inflection from this rally, they will be better off focusing on forward-looking indicators (readiness for production, ramping up capacity and qualifying customers) instead of waiting for confirmation, which, if unsuccessful, may be costly in terms of not achieving new all-time highs.

Should You Buy Intel Stock Now?

The future value of Intel stock depends on the time frame and the willingness to take risks with execution. While Intel has positive momentum from; better positioning for AI-based data center solutions, larger partner relationships with players like Google and the Terafab initiative, server CPU shortage impacts benefiting its portfolio and better visibility for an upcoming roll-out of next generation chips; there are clear trade-offs facing Intel including a financial recovery still in progress, converting brand recognition into volume shipments and a valuation still requiring support through smooth progress through 2026 into 2027. 

Investors confident that Intel will meet its deadlines for Diamond Rapids, significantly grow deployments of IPU and Xeon and convert foundry aspirations to revenue-generating customers, may consider pullbacks as great opportunities to increase their equity exposure in Intel. 

On the other hand, Investors seeking immediate upside multiples protection will likely wait for either an earnings-based recovery or a better valuation entry point. Regardless, Intel's current investment thesis has become much more focused on execution strategy, rather than on Intel's ability to survive as a business, making the investment in Intel's stock a more favorable opportunity, regardless of the recent volatility in its share price.