Wall Street is piling into Intel ahead of the chipmaker's quarterly earnings report scheduled for after the close on Thursday.
The stock jumped about 10% on Wednesday to its highest since January 2022, continuing a rally that lifted it 84% last year, and bringing its gains over the past 12 months to 145%.
Much of the optimism is tied to strong sales of Intel's latest server chips, which analysts say are benefitting from rising spending on artificial intelligence infrastructure. KeyBanc analysts upgraded the stock to the equivalent of a buy earlier this month, suggesting that Intel is likely sold out of server CPUs for this year, meaning prices could be on the rise.
"We expect outsized data center demand from hyperscalers this year to be a significant tailwind" for Intel's data center business, the KeyBanc analysts wrote. They have a price target of $60 for the stock, which is currently trading at around $53.
Intel is also getting a boost from recent indications that the company's foundry business, which is still seeking an anchor customer, could start to secure orders and become the No. 2 chip foundry behind Taiwan Semiconductor Manufacturing Company and ahead of Samsung.
Intel recently touted its 18A manufacturing technology, seen as equivalent to TSMC's 2 nanometer process technology. The U.S. government has become a key backer of Intel, making it the largest shareholder after an $8.9 billion investment last year, partially because it's the only American company capable of making advanced chips.
Nvidia, the leading maker of AI chips and a prospective customer for Intel's factories, is one of the top shareholders in the company after a $5 billion investment last year. Intel and Nvidia agreed to work together to integrate Intel's CPUs with Nvidia's AI chips in Nvidia systems.
The government's stake has increased by $14 billion since its deal was agreed to in August. Nvidia's stake has grown by more than $6 billion since its investment the following month.
Intel CEO Lip-Bu Tan was appointed to the top job in March, and has since slashed costs, cut jobs, and re-organized the leadership structure.
Analysts expect Intel to report a 6% drop in year-over-year revenue for the fourth quarter to $13.4 billion, according to LSEG. However, they're projecting data center and AI sales to surge nearly 29% to $4.4 billion, according to FactSet estimates.
Other chip stocks rose on Wednesday, including Intel rival Advanced Micro Devices and memory maker Micron Technology, which each gained about 6%. The market broadly rose after President Donald Trump said he won't use military force in Greenland.
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