TLDR
- Intel shares climbed 11% Wednesday to reach their strongest level since January 2022
- The stock has gained 149% over 12 months as Wall Street bets on AI-driven server demand
- U.S. government and Nvidia investments totaling nearly $14 billion have boosted confidence
- Fourth quarter earnings arrive Thursday with analysts forecasting 29% data center revenue growth
- KeyBanc believes Intel sold out server CPU supply for 2025, potentially pushing prices higher
Intel stock rocketed 11% higher Wednesday, closing above $54 for the first time since early 2022. The rally arrives one day before the company reports quarterly results.
Intel Corporation, INTC
Trading volume spiked to 217.5 million shares, roughly 62% above normal levels. The move extends a powerful 12-month run that has delivered 149% gains to shareholders.
Wall Street’s growing optimism centers on Intel’s data center business. Analysts expect this segment to post 29% revenue growth in the fourth quarter, reaching $4.4 billion. Strong demand for AI infrastructure appears to be driving server chip orders.
KeyBanc upgraded Intel to buy earlier in January with a $60 price target. The firm’s research suggests Intel has completely sold through its 2025 server CPU allocation. That supply shortage could support higher pricing throughout the year.
Backing from Government and Nvidia
The U.S. government now holds the largest stake in Intel after investing $8.9 billion last year. That position has appreciated by $14 billion since the August deal closed.
Intel represents the only American chipmaker with advanced manufacturing capabilities. This strategic importance drove Washington’s investment decision.
Nvidia added $5 billion to Intel’s balance sheet through a separate investment. The AI chip leader agreed to work with Intel on integrating CPUs with Nvidia’s processors. Nvidia’s stake has grown over $6 billion in value since September.
CEO Lip-Bu Tan has moved quickly since taking charge in March. He slashed costs, cut jobs and restructured the leadership team. Intel recently demonstrated its 18A manufacturing process, which matches TSMC’s 2 nanometer technology.
What to Expect from Earnings
Analysts project overall fourth quarter revenue of $13.4 billion, down 6% year-over-year. The data center strength will need to offset weakness in other divisions.
RBC Capital expects a “slight” beat on consensus estimates with guidance roughly in line. The firm notes solid server CPU demand but flags memory price increases as a potential headwind for 2026 PC volumes.
Gross margins should get a lift from better pricing power. However, new product launches including Lunar Lake and Panther Lake may create near-term margin pressure.
Multiple brokerages have raised ratings recently. Melius Research moved to buy with a $50 target. Citigroup jumped from sell to neutral and hiked its price target from $29 to $50.
The consensus view remains cautious overall. Among all analysts covering Intel, four rate it buy, 28 say hold, and six recommend selling. The average price target sits at $40.86.
Sanford C. Bernstein lifted its target from $35 to $36 while keeping a market perform rating. The recent price surge has raised the bar for Thursday’s report.
Options markets are pricing in substantial post-earnings movement. After such a strong run, investors will scrutinize margin trends and foundry execution closely.
Intel reports after the closing bell Thursday. The company carries a $259 billion market capitalization with a beta of 1.35.
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Source: https://blockonomi.com/intel-intc-stock-rallies-11-before-thursday-earnings-report/