Intel's shares have recently experienced a remarkable surge, fueled by a substantial $5 billion investment from Nvidia and emerging reports of potential collaborations with Apple. This unexpected rally has captured the attention of even long-standing skeptics, as the company's stock jumped nearly 9% on Thursday and has seen an impressive 70% increase this year. While this upturn has brought renewed optimism to the chipmaker, market analysts express a cautious outlook, emphasizing that sustained growth hinges on Intel securing more significant customer commitments for its core foundry business.
For a considerable period, enthusiasm for Intel's stock was muted among investors. However, a series of recent developments has dramatically shifted perceptions. Beyond the notable investment from Nvidia, which itself has injected a significant boost, rumors of potential deals with Apple have added to the excitement. This flurry of positive news, alongside a public endorsement from President Donald Trump, has led many to reconsider their bearish stances, prompting questions about whether the underlying fundamental concerns regarding the chipmaker's business can be temporarily set aside in favor of short-term gains.
Bernstein analysts, who previously held reservations about Intel's fundamental health, noted a significant change in market sentiment. While acknowledging the company's ongoing challenges, they conceded that the current momentum, driven by high-profile investments and political support, presents a compelling, albeit unconventional, bull case. They highlighted that the influence of external factors, such as the President's interest in bolstering domestic chip manufacturing, is playing a crucial role in the stock's current trajectory, making it difficult to bet against the company in the immediate future.
Intel's stock closed around $34 on Thursday, marking a substantial jump. This climb was significantly influenced by reports suggesting that Apple might be the next major investor, following Nvidia's $5 billion commitment. This recent wave of investment and speculative interest has propelled Intel's shares to their current levels, though they still remain below their 2021 peaks. Analysts from Seaport Research Partners, who recently upgraded Intel's stock to neutral, anticipate that this positive trend could continue in the short term, driven by further investments. However, they also underscored the critical need for Intel's foundry business to show genuine signs of improvement and secure firm commitments for chip manufacturing.
Despite the recent financial backing, it's important to note that Nvidia's deal did not include explicit commitments to utilize Intel's foundry services. Similarly, any potential agreement with Apple might not necessarily involve the direct use of Intel's manufacturing facilities. Gene Munster, co-founder of Deepwater Asset Management, suggested in a recent interview that Apple's interest in investing in Intel could be a strategic move to foster goodwill with the Trump administration, rather than a direct endorsement of Intel's manufacturing capabilities. This perspective highlights that some of the current investment interest might be influenced by geopolitical and strategic considerations, rather than solely by Intel's technological prowess.
Wall Street analysts, as tracked by Visible Alpha, generally maintain a cautious "hold" rating on Intel's stock, with consensus price targets around $26, significantly below its current trading price. This indicates a prevailing belief that a market correction is likely. Analysts emphasize that while financial investments are welcome, Intel's long-term success hinges on its ability to meet the demanding requirements of customers in terms of scale, speed, and cost-effectiveness. Without concrete commitments from major clients for its manufacturing services, purely financial support, even from governmental sources, will not be sufficient to ensure sustainable growth and a robust future for the chipmaker.