Intel stood out in the S&P 500 on Monday, with its shares jumping 12% and leading the index. Chip stocks in general bounced back after Friday’s sharp sell-off, which had been the worst day for the Philadelphia Semiconductor Index since 2020. Here’s what caused Intel’s big move and why the stock is getting more attention, even though Wall Street remains cautious.
The overall recovery in chip stocks helped set the stage. Broadcom rose 2.7% after two days of losses following its modest revenue outlook. Advanced Micro Devices and Super Micro Computer each gained 4%, while NVIDIA was up 1.6%. Intel’s gains were much higher than any of these.
Two main factors seem to have boosted Intel’s gains beyond the general sector recovery. The Information reported that AI chip design companies like Google and Nvidia have quietly started using Intel as a backup manufacturer for advanced processors to keep up with high demand. Intel did not comment, and NVIDIA and Alphabet also did not respond to requests for comment. If true, this could be an important step forward for Intel’s foundry business.
The second factor is the continued strong demand for server CPUs. On June 1, Morgan Stanley analysts said that server CPU trends are still the most important part of the case for investing in Intel, even more than its foundry business or other options. The firm pointed out that Intel is well positioned to beat and raise short-term estimates because of current server CPU shortages. At the Computex conference last week, Intel’s CEO said that in the past month, he had received calls from other CEOs asking for more CPUs. Intel also announced a new partnership with Foxconn, a supplier for Apple, to develop AI infrastructure.
Even with the recent rally, Wall Street is still cautious. Out of 51 firms surveyed by FactSet, the average rating for Intel is Hold, with a price target of $98.15, which is much lower than Monday’s trading price. Intel shares have risen 190% this year and 422% over the past twelve months.
