Intel (INTC) shares popped on Tuesday after a major Wall Street upgrade highlighted growing confidence in the chipmaker’s turnaround, driven by surging data center demand tied to AI and meaningful improvements in its long-troubled manufacturing business. The rally adds to a powerful run for the stock over the past year as investors reassess Intel’s competitive position in a rapidly evolving semiconductor landscape.
The move reflects recalibration of expectations around Intel’s ability to capitalize on AI-related spending, not by competing directly with GPU leaders, but by supplying the CPUs, packaging, and fabrication services that underpin large-scale data center buildouts.
Analyst Upgrade Points to Tight Supply and Pricing Power
The catalyst for Tuesday’s surge was an upgrade from KeyBanc Capital Markets, which raised its rating on Intel to Overweight. The firm cited strong supply-chain signals indicating that Intel’s data center server CPUs are nearly sold out for the year, a notable shift after several years of sluggish demand and market share losses.
According to the analyst note, hyperscaler spending on AI infrastructure is driving renewed demand for Intel’s traditional processors, which work alongside accelerators from companies such as Nvidia. With capacity tightening, Intel is now seen as having room to raise prices, a development that could materially improve margins in its Data Center and AI segment.
Manufacturing Turnaround Gains Credibility
Investors have also zeroed in on what analysts described as “significant progress” in Intel’s manufacturing operations, long viewed as the company’s weakest link. Intel’s advanced 18A process node is reportedly showing improving yields, helping restore confidence in its ability to execute after years of delays and underperformance.
Improving yields are critical not just for Intel’s own chips, but for the broader ambitions of its foundry business. Analysts now see Intel as increasingly capable of competing for external customers, potentially positioning it ahead of rivals such as Samsung and closer to industry leader TSMC in certain advanced manufacturing niches.
Apple Rumors Fuel Foundry Optimism
Another major driver of enthusiasm is speculation that Apple could become an integral customer for Intel’s next-generation manufacturing processes. Supply-chain checks suggest Apple may use Intel’s upcoming 18A-P process for lower-end chips in Macs and iPads, with longer-term discussions potentially extending to future iPhone components.
While unconfirmed, such a deal would mark Intel’s first major “anchor customer” for its foundry services and validate years of heavy investment. Even limited production volumes would signal trust in Intel’s manufacturing roadmap and help improve factory utilization, a key factor in restoring profitability.
AI Infrastructure Spending Lifts the Broader Chip Sector
Intel’s rally comes amid renewed optimism across the semiconductor space as cloud providers accelerate spending on AI data centers. The trend has lifted multiple chipmakers, including Intel rival AMD, as investors focus on the full stack of hardware required to support AI workloads. Notably, analysts emphasize that Intel’s opportunity lies less in replacing AI accelerators and more in serving as a foundational supplier — through CPUs, advanced packaging, and potentially foundry services — to the companies building and operating AI infrastructure at scale.
Looking Ahead
Intel’s latest surge reflects a market increasingly willing to believe in a multi-year recovery story, supported by tangible demand signals and improving execution rather than promises alone. Sustaining that momentum will depend on whether pricing power materializes, manufacturing gains hold up, and rumored foundry wins translate into confirmed contracts. If those pieces fall into place, Intel’s recent rally may prove less like a speculative spike and more like a re-rating driven by a fundamentally stronger outlook.