Intel stock (INTC) surged more than 7% on Tuesday after a major Wall Street analyst upgraded the company’s outlook, pointing to rising demand from AI data centers and steady improvement in Intel’s manufacturing operations. The positive assessment helped boost investor confidence in a company that has spent the past few years trying to regain its footing in the competitive chip industry.
Investment firm KeyBanc Capital Markets raised Intel’s stock rating to Overweight from Sector Weight, signaling that the firm expects Intel shares to outperform the broader market. Analyst John Vinh cited growing sales of Intel’s data center chips, strong interest from large technology companies investing heavily in artificial intelligence, and meaningful progress in Intel’s factory operations.
AI Data Centers Drive Strong Chip Demand
One of the biggest drivers behind the upgrade is the ongoing surge in spending on AI infrastructure. Major technology companies are rapidly building and expanding data centers to support artificial intelligence systems, and these facilities require more than just advanced AI chips.
While companies like Nvidia dominate the AI chip space, traditional processors, known as CPUs, are still essential for running servers and supporting AI workloads. Intel remains a key supplier of these CPUs, and demand has been stronger than expected.
According to Vinh, checks across Intel’s supply chain suggest that the company is nearly sold out of its data center server CPUs for the rest of the year. This high level of demand could even allow Intel to raise prices, which would directly improve its revenue and profit outlook.
This strong sales momentum shows that Intel continues to play an important role in the AI boom, even as it faces intense competition from rivals such as AMD.
Manufacturing Progress Lifts Investor Confidence
Beyond chip sales, Intel’s manufacturing business has become a major focus for investors. The company has been working to rebuild its chip-making operations after years of delays and production issues that allowed competitors to pull ahead.
Intel’s struggles created a difficult cycle: weaker manufacturing reduced the appeal of its chips, while lower chip sales left its factories underused. This made it even harder to invest in improvements.
However, recent developments suggest that Intel is starting to break out of that cycle. The company’s latest production technology, known as 18A, has shown better results than earlier versions. Intel has already launched PC chips using this process, and early feedback has been encouraging.
A new chief executive, along with financial support from the U.S. government and strategic investments from Nvidia, has also helped restore some confidence in Intel’s long-term strategy.
Apple Partnership Could Be a Major Win
One of the most significant highlights from the KeyBanc report is the possibility of a new partnership with Apple. Vinh said supply chain sources in Asia suggest that Apple has signed on as a customer for Intel’s upcoming 18A-P manufacturing process.
If confirmed, Intel would produce lower-end chips for Apple devices such as Macs and iPads using this technology. While these chips are not Apple’s most powerful products, the deal would still represent a major breakthrough for Intel’s foundry business.
Industry observers have long viewed Apple as a prized customer due to its scale and high standards. Vinh described the potential agreement as Intel’s first major “whale” customer win, meaning a large and influential client that could attract additional business.
The idea of an Apple-Intel manufacturing partnership first gained attention late last year when well-known analyst Ming-Chi Kuo suggested such a deal was likely. At the time, Intel’s stock jumped sharply on the news.
Vinh also believes discussions may already be underway for Apple to use Intel’s future 14A manufacturing process to make lower-end iPhone chips starting around 2029. While neither company has confirmed these reports, the possibility alone has energized investors.
Intel’s Foundry Ambitions Take Shape
Improving production quality is another key factor behind the analyst upgrade. Vinh noted that Intel’s manufacturing yields, the percentage of usable chips produced, have improved enough to make the company a credible alternative to Samsung.
The global chip manufacturing industry is dominated by just three major players: Taiwan’s TSMC, South Korea’s Samsung, and Intel. If Intel can establish itself as the second-largest supplier, it would mark a dramatic turnaround from its struggles of recent years.
This progress is especially important as more companies seek to diversify their chip suppliers and reduce dependence on a single region or manufacturer.
Stock Performance and Price Target
Intel’s stock rally on Tuesday adds to an already impressive run. Shares are now up nearly 140% over the past year, reflecting renewed optimism about the company’s future.
KeyBanc’s John Vinh has set a $60 price target for Intel shares. By late Tuesday morning, the stock was trading around $46.70, suggesting further upside if the company continues to execute on its plans.
AMD Also Benefits From AI Spending
The strong outlook for AI data centers isn’t just helping Intel. Vinh also upgraded rival chipmaker AMD to Overweight, citing similar benefits from the rapid expansion of AI infrastructure. AMD shares rose about 5% on Tuesday following the announcement.
Together, the upgrades highlight how the AI boom is lifting multiple players across the semiconductor industry, not just the biggest names.
Intel’s latest stock surge reflects growing confidence that the company is making real progress after years of setbacks. Strong demand from AI data centers, improving manufacturing results, and the possibility of landing Apple as a major customer have all combined to reshape the narrative around the chipmaker.
While challenges remain, Intel’s turnaround story is gaining momentum, and investors are clearly taking notice.
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