Shares of Intel are surging toward their dot-com era peak, driven by an unexpected revival in demand for its core processors as artificial intelligence shifts from training to real-world applications. The stock, up nearly 29% in premarket trading to around $86, is expected to open above its 2000 peak, pushing the company’s market valuation past $420 billion.
The rally marks a dramatic comeback for Intel after years of lagging behind rivals in the semiconductor race.
What’s driving the surge?
At the heart of Intel’s rise is a surprising shift in the AI landscape. While graphics processing units (GPUs) have dominated AI training, there is growing demand for central processing units (CPUs), particularly for AI inference, the stage where systems respond to user queries.
This shift has played directly into Intel’s strengths. Demand for its Xeon server processors has surged, especially from companies building and operating AI data centres. In fact, demand was so strong in the first quarter that Intel sold chips it had previously written off.
AI inference brings CPUs back into focus
The renewed interest in CPUs is not limited to Intel. Rivals such as AMD and Arm also saw their shares rise, showing broader confidence that inference workloads could rebalance the chip market.
Even Nvidia, which has led the AI boom with its GPUs, appears to be adapting. The company recently introduced its own central processor.
Strong results reinforce momentum
Intel’s latest quarterly performance has further boosted investor confidence. The company reported $13.6 billion in revenue for the first quarter, beating expectations and marking a 7% year-on-year increase.
Its data centre and AI division stood out with revenue rising 22% to $5.1 billion. Earnings also exceeded forecasts, with earnings per share coming in at $0.29, well above analyst expectations.
Supply tightness and pricing power
According to CFO David Zinsner, tight supply conditions and higher pricing also contributed to the strong performance. The company even tapped into older or previously unsold inventory to meet demand, working closely with customers to fulfil orders.
However, he cautioned that this may not provide the same boost in the coming quarters.
Turnaround gains traction
Under CEO Lip-Bu Tan, Intel’s turnaround strategy appears to be gaining momentum. The stock has already risen about 80% this year, following a similar surge last year.
Investor optimism is also reflected in its valuation, with Intel now trading at higher forward earnings multiples compared to peers like AMD and Nvidia.
Adding to the momentum, Intel recently secured Tesla as a customer for its next-generation chipmaking process, marking a symbolic win for its contract manufacturing ambitions.