Intel Went From Market Reject to Musk's AI Partner — What Happens Next?

Key Points

• Intel has surged more than 220% since last summer and 50% since the end of March, with the latest leg driven by its involvement in Elon Musk’s Terafab AI chip project.
• Partnering with Tesla, SpaceX, and xAI has boosted its credibility, but analysts remain split on how much near-term upside remains. 
• With shares starting to look overbought ahead of earnings, the setup might lean toward caution rather than exuberance. 

Tech giant Intel Corp NASDAQ: INTC has staged one of the most dramatic turnarounds in the market over the past couple of quarters. With the stock having been at multi-year lows this time last year, almost becoming a byword for disappointment in the process, Intel shares are suddenly on the verge of a five-year high, up more than 220% since last August.

They’ve been accelerating their gains in recent weeks and days, adding 50% gain since the end of March alone.

The latest leg higher has been driven by fresh news this week that Intel is joining Elon Musk’s Terafab AI chip production project alongside his Tesla Inc NASDAQ: TSLA, SpaceX, and xAI companies. That development has injected a new level of excitement into the story, placing Intel at the center of one of the most ambitious artificial intelligence (AI) infrastructure initiatives currently under construction.

The question now is whether this renewed momentum still has room to run, or whether the stock has already priced in much of the upside ahead of its next earnings report on April 23. Let’s take a closer look.

A Narrative Shift Is Underway

While this week’s update on Intel’s partnership with Musk and his portfolio is big news, the most important change in Intel’s story over the past year has been the shift in perception around its foundry business. What was once viewed as a long-term, uncertain turnaround effort is now increasingly framed as a credible path back to relevance in the semiconductor industry.

The fact that Intel Foundry Services is gaining traction as a supplier in the broader AI ecosystem is proof of this. Having once been an “also-ran” stock, this shift has allowed Intel to re-enter conversations around the next phase of technology growth, rather than being seen as a company doomed to lag behind its younger, more nimble peers. That shift alone has been enough to drive a significant re-pricing in the stock, even as many of the underlying improvements remain in their early stages.

Terafab Has Put Intel Back in the Spotlight

All that being said, this week’s Terafab announcement has been a welcome catalyst for the bulls. Intel’s involvement in the project alongside Tesla, SpaceX, and xAI has done much to ease bearish concerns on its turnaround, while effectively validating its role in the emerging AI supply chain. These are some of the most aggressive players in the AI space, and their decision to work with Intel signals that the company is once again being taken seriously at the highest level.

Considering that Intel shares have gained close to 20% since the news broke, the market clearly is taking it seriously, too. At the same time, however, analysts are not fully aligned on how to interpret this shift. The likes of KeyCorp have leaned into the opportunity, reiterating their Buy rating on the stock and raising their price target to $70. Despite the recent price surge, that target still indicates healthy upside ahead of the company’s upcoming earnings report.

Others, though, like Cantor Fitzgerald and Wells Fargo, have taken a more cautious stance, assigning fresh Hold or equivalent ratings that reflect uncertainty about how quickly this new narrative will translate into financial results.

The Rally Has Moved Faster Than the Fundamentals

From the sidelines, it’s hard not to think bears may have a point. There’s no denying that Intel’s story has improved night and day from this time last year, but the stock has moved even faster.

A 220% rally, not to mention a 50% surge over the past 10 days, suggests that a significant amount of optimism is already priced in. The Terafab news has accelerated that move, but it has also raised expectations at a time when much of the underlying progress is still in the early stages.

Key elements of the bull case, including the success of the foundry business and the economics of projects like Terafab, remain largely unproven. That means execution risk is still meaningful, and the path to realizing its full potential has yet to be made clear. This creates an exciting, though potentially dangerous, situation in which the emerging narrative is strong but the fundamentals are still catching up.

Earnings Will Be the Next Major Test

That all means that Intel’s next earnings report, due on April 23, will be as closely watched as it's ever been. After such a sharp run higher, investors will be looking for confirmation that the recent narrative shift is backed not only by a clear vision from management, but ideally by some tangible progress already.

If Intel can deliver on those fronts, the rally could extend further, supported by both momentum and improving fundamentals. In that context, the stock is currently still undervalued and remains a buy ahead of the report.

On the other hand, however, the risk and scale of a potential pullback if the report were to disappoint increase accordingly. For investors on the sidelines, that makes for an interesting setup. The long-term opportunity may be increasingly compelling, but the risk of near-term volatility might outweigh the potential of near-term gains.