The most optimistic time in a long time! Intel shares surge on the eve of earnings report

**Source**: Wall Street Insights

**By Long Yue**

Benefiting from the explosive demand in data centers and strategic investments from giants including the U.S. government and NVIDIA, Intel's share price surged 11% to a four-year high, with its market value exceeding $250 billion. Not only are server CPUs facing stockouts and price hikes, but the company's foundry ambitions and progress in its 18A process have also become the focus of market attention. Even though there are still concerns lingering over the PC market, Wall Street has placed a big bet on its recovery logic.

After years of strategic missteps and market share losses, chip giant Intel is regaining favor on Wall Street, buoyed by strong demand expectations for its data center business and massive external capital injections.

Ahead of its highly anticipated quarterly earnings report, Intel's share price soared more than 11% at Wednesday's close, breaking through its highest level since January 2022 in one fell swoop. This strong momentum pushed the company's market value above the $250 billion mark for the first time since 2022. Following an 84% gain last year, the stock has risen approximately 35% since the start of 2026, with a cumulative increase of as much as 149% over the past 12 months.

The dramatic reversal in market sentiment stems mainly from optimism about Intel's data center business and recognition of the aggressive reform measures implemented by its new CEO Pat Gelsinger. Ryuta Makino, an analyst at Gabelli Funds, told Reuters bluntly:

"I think this is the most optimistic people have been about the company in a long time; the recent strategic moves are very favorable."

Wall Street widely believes that the earnings report, scheduled to be released after the market closes on Thursday, will be a crucial litmus test to verify the effectiveness of Intel's recovery.

In addition to earnings expectations, Intel has also benefited from a broad rally in the semiconductor sector and strong endorsements from external strategic investors. Key shareholders including the U.S. government and NVIDIA strengthened the company's balance sheet through capital injections last year. On Wednesday, the chip sector rallied across the board, with rival AMD rising about 8% and Micron Technology climbing 7%. Furthermore, the overall market sentiment was lifted by U.S. President Trump's remarks that the U.S. would not seize Greenland by force.

## Explosive Data Center Demand and Return of Pricing Power

The core driver behind investors' renewed interest in Intel lies in the robust recovery of its server chip sales. Analysts point out that although NVIDIA's GPUs dominate AI workloads, large tech companies still need to purchase a large number of Intel's traditional server CPUs when rapidly building data centers.

According to estimated data from FactSet and LSEG, Intel's data center and AI business revenue is expected to surge nearly 29% to 30% to approximately $4.4 billion. Earlier this month, analysts at KeyBanc upgraded Intel's stock rating to the equivalent of "Buy" and set a target price of $60. They noted that Intel's server CPUs may already be sold out for this year, which means prices are likely to rise.

"We expect excess data center demand from hyperscale cloud vendors to be a significant tailwind this year," KeyBanc analysts wrote in a report. Ryuta Makino echoed a similar view, stating that server CPU prices are expected to rise by at least double digits in 2026, which constitutes an important pillar of the bullish case for Intel.

## Giant Investments and Foundry Ambitions

Intel's "comeback" relies not only on product sales but also on the restructuring of its capital structure and its vision for the foundry business. Under the leadership of CEO Pat Gelsinger, the company has significantly improved its financial position by bringing in external capital.

According to CNBC, after investing $8.9 billion last year, the U.S. government has become Intel's largest shareholder. This move is partly due to the fact that Intel is the only U.S.-based company capable of manufacturing advanced chips. In addition, NVIDIA, a leader in AI chips, invested $5 billion last year to become one of its top shareholders; SoftBank also injected $2 billion. NVIDIA and Intel have reached an agreement to integrate Intel's CPUs into NVIDIA systems.

In the foundry sector, Intel is seeking to establish itself as the world's second-largest chip foundry after TSMC. The company has recently heavily promoted its 18A manufacturing process, which is regarded as comparable to TSMC's 2nm process. Although the business is still in the process of securing major customers, NVIDIA and Broadcom have already conducted manufacturing tests, sparking market speculation about future orders.

## PC Market Concerns and Profit Margin Pressures

Despite the upbeat market sentiment, Intel's fundamentals are not without blemishes. Analysts expect the company's total fourth-quarter revenue to decline 6% year-on-year to $13.4 billion.

In the personal computer (PC) segment, Intel is facing a mixed picture. While it has launched the "Panther Lake" chips based on the 18A process, the segment's revenue is expected to grow by only 2.5% to $8.21 billion. Analysts warn that rising memory prices driven by global shortages may push up laptop costs, thereby curbing demand. In addition, Intel continues to lose market share to AMD and Arm-based designs in the PC market.

There is also pressure on profit margins. Due to the high costs of fixing its manufacturing business, the adjusted gross margin for the fourth quarter is expected to drop by about 6 percentage points to 36.5%. Reuters reported that although the yield rate of the 18A process is improving month by month, only a small portion of chips currently meet customer standards, and the scale of commercial mass production remains uncertain.

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