2 Chip Stocks That Have Gone Parabolic This Month. Should Investors Buy These High Flyers?

Some surprising chip stocks shone in April, helping significantly broaden the artificial intelligence (AI) boom.

Shares of analog chipmaker Texas Instruments (NASDAQ: TXN) and chip manufacturing giant Intel (NASDAQ: INTC) have surged in April, and both stories are worth calling out. Since the beginning of the month, Texas Instruments is up about 40%, while Intel has gained more than 70%, as of this writing.

That's a huge move in a short amount of time -- especially for two mature semiconductor companies.

What's particularly exciting about these stocks' sharp gains in April is that they were driven by fundamentals. Both companies recently reported results that were much better than investors had expected -- and their results demonstrated how the AI boom is expanding beyond graphics processing units (GPUs). Even more, both management teams gave investors reasons to believe that the chip recovery may have more legs.

Image source: Getty Images.

Texas Instruments: a broad recovery

Texas Instruments' first-quarter results were strong by just about any measure.

Revenue increased 19% year over year to more than $4.8 billion, while earnings per share rose 31% to $1.68. This was a significant acceleration from the fourth quarter of 2025, when revenue increased 10% year over year and earnings per share slipped 2%.

The improvement was broad, too.

Texas Instruments said its analog revenue rose 22% year over year and its embedded processing revenue increased 12%. Serving as a key driver, the company notably saw its industrial revenue increase more than 30% year over year. And perhaps the most exciting data point from the quarterly update earlier this week? Data center revenue rose about 90%.

Further, management's outlook was better than expected. For the second quarter, management guided revenue of $5.0 billion to $5.4 billion and earnings per share of $1.77 to $2.05, ranges that imply a significant sequential step-up.

With all of this said, investors should be careful not to extrapolate one great quarter too far. During Texas Instruments' first-quarter earnings call, CEO Haviv Ilan acknowledged a key risk: "the unknown for me right now is the sustainability of demand."

Sure, Texas Instruments is seeing strength across industrial, data center, and other end markets. But analog cycles can be cyclical and "lumpy," with customers sometimes overcorrecting from going too lean or too heavy on inventory for too long.

Last year, management saw what looked like a recovery early in the year, only for momentum to cool later.

The good news is that Texas Instruments looks well-positioned if the recovery persists. It has capacity, inventory, and a broad product portfolio.

But the stock now trades at a price-to-earnings ratio of about 47 as of this writing. That's a rich price for a cyclical chip company -- even a high-quality one.

Intel: a surprising turnaround

Intel's results were arguably even more surprising.

The company reported first-quarter revenue of $13.6 billion, up 7% year over year. That may not sound extraordinary on its own, but it was well above the company's prior guidance for $11.7 billion to $12.7 billion. Even more, Intel reported non-GAAP (adjusted) earnings per share of $0.29, compared to its prior forecast for adjusted earnings per share of about breakeven.

And the strongest part of the report was Intel's data center and AI business, where revenue increased 22% year over year to $5.1 billion.

Intel CEO Lip-Bu Tan said during the company's first-quarter earnings call that "demand continues to run ahead of supply for all our businesses, especially for Xeon server CPUs where we expect sustained momentum this year and next."

And this brings us to the most surprising takeaway from the report: Investors have spent years focused on graphics processing units (GPUs), but it turns out that as AI's applications expand, there's an increasing need central processing units (CPUs), too -- Intel's bread and butter.

But Intel isn't out of the woods yet. Management guided for adjusted earnings per share to decline to $0.20 in Q2 despite a forecast for higher revenue.

Further, the stock's valuation is now extremely high. Intel shares now trade at a forward price-to-earnings ratio of more than 100.

The problem is price

Both Texas Instruments and Intel just gave investors excellent reports. Texas Instruments showed a broad analog recovery with strong data center momentum. And Intel showed that it has successfully turned its business around and that the AI boom is broadening to CPUs.

But stocks are about price, not just business momentum.

And after the April rallies, neither stock looks cheap. Texas Instruments is priced as if the analog recovery will certainly continue with limited interruption. Meanwhile, Intel is priced as if its turnaround is in the bag, even though profitability remains a work in progress. Finally, neither stock leaves much room for a scenario in which the AI boom suddenly slows dramatically and goes through a consolidation period.

With that said, I wouldn't necessarily bet against either business from here. But I also wouldn't chase either stock after this kind of move. For now, both companies look much more interesting as businesses than as stocks.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Texas Instruments. The Motley Fool has a disclosure policy.