The surge in orders was so strong in the first quarter that Intel reportedly sold chips it had previously written off, tapping into old inventory to meet unexpected demand. The development has been widely interpreted as a sign that CPUs are regaining relevance in AI systems, particularly for inference—the stage where AI models process and respond to user queries.
Investor enthusiasm sent Intel shares soaring, with premarket gains of nearly 30%, positioning the stock for a historic open that would surpass levels last seen during the dot-com boom. The rally pushes Intel’s valuation above $420 billion, reinforcing growing confidence in its ongoing turnaround strategy.
Broader semiconductor markets also moved higher. Advanced Micro Devices and Arm Holdings each climbed more than 7%, reflecting renewed optimism that CPUs could reclaim a central role in AI data centers. Even Nvidia—which has dominated the AI hardware boom with its graphics processors—showed limited movement as investors weighed the implications of rising CPU competition.
Intel’s chief financial officer, David Zinsner, noted that tight supply conditions in the quarter contributed to stronger pricing power, forcing the company to draw down finished goods inventory, including legacy and previously shelved chips. However, he cautioned that such inventory-related tailwinds may not persist into the next quarter.
The rally has been reinforced by a wave of analyst upgrades, with at least 14 brokerages lifting price targets following stronger-than-expected earnings and an optimistic revenue outlook. HSBC highlighted growing demand for Intel’s Xeon server CPUs, which are widely deployed in data center environments supporting AI workloads.
The company’s momentum has been further supported by its broader turnaround narrative under CEO Lip-Bu Tan. Intel shares have already risen sharply over the past two years as investors reassess its long-term competitiveness in manufacturing and chip design.
Adding to the optimism, Intel recently secured a symbolic win in its foundry ambitions, announcing that Tesla will use its upcoming 14A chip manufacturing process for future AI-related chip production tied to plans by Elon Musk for a large-scale “Terafab” project. Analysts view the deal as an early validation of Intel’s contract manufacturing strategy, which could become a key pillar of its future growth.
Despite the strong rally, Intel now trades at a historically high earnings multiple, reflecting elevated expectations for a sustained recovery. Investors remain focused on whether its foundry business can scale meaningfully in the coming years, a milestone many analysts say would confirm a full turnaround.