(Bloomberg) — Intel Corp. has quickly become one of the hottest stocks in the S&P 500 Index thanks to a nine-day surge that has added more than $100 billion in market value.
A rash of good news over the last two weeks has reinvigorated investor enthusiasm that the chipmaker may be able to pull off a dramatic turnaround after years of underperforming amid fears that it had lost its edge in semiconductor manufacturing. Shares just posted their best week since January 2020 and have soared 53% in nine sessions, including Monday. This is the most on record for any similar stretch of trading — quite the feat for a company that went public in 1971.
“It is clearly no longer on life support,” said Thomas Hayes, chairman and managing member of Great Hill Capital, which has about $1 billion in assets under management and owns the stock.
The latest run of gains was sparked by an early April announcement that Intel had agreed to pay $14.2 billion to buy back half of a plant in Ireland from Apollo Global Management. The move was seen as proof that it’s making progress in its turnaround.
“It sees itself in expansion mode, not survival mode,” Hayes said.
Shares rose 3.1% on Monday.
The shares got another boost last week when Intel said it would join Elon Musk’s Terafab project to develop semiconductors for Tesla Inc., SpaceX and xAI. That was followed by a commitment for Alphabet Inc.’s Google to use future generations of Intel’s Xeon processors in data centers.
The rally has pushed the stock’s gains on the year to 72%, which comes on the heels of its 84% jump last year sparked by investments from Nvidia Corp., SoftBank Group Corp. and even the US government. The government’s stake is now worth roughly $27 billion, more than three times its original investment and slightly less than what the US pays annually for childcare services.
“The Intel narrative keeps accelerating,” Melius Research analyst Ben Reitzes wrote in a note to clients on Friday as he raised his price target on the stock for the third time this year. “The thesis around Intel’s value as a strategic foundry asset seems to be validated daily.”
To be sure, the stock is still down about 8% from its 2020 high, compared with a gain of more than 100% for the S&P 500, which has been partially fueled by a surge in major AI chipmakers like Nvidia, Broadcom Inc. and more recently Micron Technology Inc.
Wall Street is also far from convinced the worst is over for Intel. Of the 52 analysts tracked by Bloomberg who follow the shares, just 10 have buy ratings and six have sells, more than double the average for an S&P 500 stock. Intel’s recommendation consensus — a proxy for the ratio of its buy, hold, and sell ratings — stands at 3.15 out of five, the weakest among chipmakers. The stock also trades at a sizable premium to the average analyst price target, an indication that it has run too far, too fast.
