TL;DR – Intel shares jumped over 24% to a record high after first-quarter results and forecasts beat expectations, fueled by surging demand for its Xeon server CPUs in AI data centers. The shift toward AI inference and agentic AI is increasing CPU-to-GPU ratios, driving higher prices and straining supply. Strategic partnerships with Tesla, Google, and others are bolstering Intel’s manufacturing ambitions, though execution and cost risks remain.
Shares of Intel surged over 24% to $83 in early Friday trading, surpassing their dot-com era peak and pushing the company’s market value past $416 billion. The rally followed a strong first-quarter report, with revenue reaching $13.6 billion—$1.4 billion above the midpoint of guidance—and a second-quarter sales forecast that exceeded Wall Street expectations.
Analysts attributed the upside largely to surging demand for Xeon server CPUs, increasingly used in AI inference workloads. In response, more than 20 brokerages raised their price targets.
Why AI is making CPUs ‘cool again’
Shares of Intel surged over 24% to $83 in early Friday trading, surpassing their dot-com era peak and pushing the company’s market value past $416 billion. The rally followed a strong first-quarter report, with revenue reaching $13.6 billion—$1.4 billion above the midpoint of guidance—and a second-quarter sales forecast that exceeded Wall Street expectations.
Analysts attributed the upside largely to surging demand for Xeon server CPUs, increasingly used in AI inference workloads. In response, more than 20 brokerages raised their price targets.
“Supply will go up in the second quarter. It is going to go up every quarter now going forward. We were certainly at our lowest point in terms of supply in the first quarter relative to the rest of the year.” – David Zinsner
Strategic partnerships bolster manufacturing push
Intel is also gaining traction in advanced manufacturing. The company secured Tesla as a customer for its next-generation 14A process, tied to Elon Musk’s Terafab AI chip initiative.
It expanded collaborations with Google on Xeon processors and custom ASICs, and is working with SpaceX and xAI on advanced silicon technologies.
Despite this momentum, Intel’s foundry division posted a $2.4 billion operating loss in Q1. Analysts expect meaningful revenue contributions from the unit beginning in 2027, underscoring ongoing execution challenges.
Opportunities and risks ahead
Under CEO Lip-Bu Tan, Intel’s turnaround has been supported by cost cuts, asset sales, and U.S. government funding. The company has now exceeded expectations for six consecutive quarters and projects double-digit growth in server CPUs through 2027.
However, risks remain. Intel flagged rising costs for memory, wafers, and substrates, along with expected weakness in the PC market later this year. The stock also trades at roughly 90 times forward earnings—significantly higher than peers—while supply constraints and foundry losses continue to weigh on the outlook.
