Key Takeaways
- Intel’s stock has risen over 200% in 2026 alone, and its growth is tied to the latest boom in AI infrastructure.
- Demand for server CPUs is surging as agentic AI systems require more traditional data center infrastructure alongside GPUs.
- Investors remain focused on whether Intel can execute on its foundry ambitions and compete against AMD, Arm-based chipmakers, and TSMC.
Intel INTC stock has become one of the biggest semiconductor stories of 2026, climbing over 220% in six months as investors bet on the company’s ability to benefit from the newest phase of the artificial intelligence boom.
The rally reflects growing optimism that Intel can capitalize on surging demand for server central processing units, which have become more important as companies deploy agentic AI systems. But Morningstar senior equity analyst Brian Colello says investors may be pricing in a best-case scenario, even as Intel continues to face significant competitive and execution risks.
Intel’s turnaround is increasingly an AI story. The company still lacks a meaningful AI GPU business capable of competing directly with Nvidia NVDA, but renewed demand for server CPUs has transformed investor perceptions of its prospects.
“Intel still doesn’t have a meaningful AI GPU to compete head-to-head with Nvidia or AMD,” Colello says. “But the server CPU business [Intel’s specialty] is increasingly tied to AI.”
A Sudden Boom in Agentic AI Brings Intel’s CPUs Back Into the Spotlight
For much of the past three years, AI spending has been dominated by graphics processing units, such as those made by Nvidia and Advanced Micro Devices AMD. GPU chips power the training and inference workloads behind large language models. But with the rise of agentic AI, there’s a new piece of the infrastructure puzzle.
“What changed certainly in the past few months has been the explosive demand in server CPUs [made by Intel],” Colello says. “This was a market ignored for the most part in 2023, 2024, even parts of 2025, because all of the data center spending was going to GPUs built by Nvidia.”
High-level GPUs excel at quickly processing huge amounts of data, which makes them integral to the development of large-language models. On the other hand, CPUs, like the ones made by Intel, generally manage a wide variety of tasks and coordinate different systems. The boom in agentic AI—which is built to make decisions, plan multi-step tasks, and coordinate workflows—has brought CPUs into the spotlight, Colello explains.
“You have all these agents getting instructions from a large language model, but then they need to connect to all the data that sits in a traditional data center elsewhere,” he says. “So all of a sudden, you need many, many more CPUs than what was expected.” As a result, CPUs are becoming increasingly important alongside GPUs rather than being replaced by them. “It’s been a GPU-focused expansion [for] the past three years. CPUs are having their day to be side by side.”
Risks Still Hang Over Intel
Despite improving demand trends, Collelo says Intel continues to face substantial challenges. The company spent years losing market share, struggling with manufacturing delays, and falling behind rivals in AI accelerators. While demand growth may benefit Intel, Colello cautions that stronger industry fundamentals do not guarantee market share gains.
“The market growth should drive growth for Intel,” he says. “It’s possible that they bleed more share, not just to AMD, but to other outside competitors.” Hyperscalers like Amazon, Google, and Microsoft have increasingly developed their own custom chips, while Arm-based processors continue gaining traction. “Intel and AMD are the incumbents, and so they’re in tremendously high demand, but other chips are coming in to the extent that the hyperscalers can reduce their reliance on Intel and AMD, they might choose to do so.”
The foundry business remains another major uncertainty. Colello notes that Intel’s largest potential customers, including Apple, Nvidia, and AMD, already rely heavily on Taiwan Semiconductor Manufacturing TSM and may have little incentive to shift significant production volumes to Intel. “Intel’s foundry, I think, has not fared well in recent years,” he says. “Because the three largest customers already compete with Intel.”
And while Intel has announced agreements and discussions with companies including Tesla and other potential customers, many of those opportunities remain years away from meaningfully contributing to revenue. Regarding Tesla’s Terafab initiative, Colello says demand assumptions depend on a future where autonomous vehicles and humanoid robots become widespread.
“Intel’s relationship with Tesla Terafab sounds very experimental right now…[Tesla is] basically calling for a massive expansion of processing and computing chips to the point that they’re concerned that Taiwan Semiconductor is not expanding quickly enough," Colello explains. He thinks that for the full expansion to be warranted, “We would have to be in a world where there are millions of humanoid robots out there and hundreds of millions of autonomous Teslas out there.” He says Tesla Terafab’s relationship with Intel is based on long-term propositions rather than short-term demand.
Uncertainties Remain in the Industry Despite the AI Opportunities
One reason Colello remains cautious is that the AI opportunity extends well beyond Intel. He argues that growing CPU demand should benefit AMD, Arm Holdings ARM, and even the hyperscalers building their own chips. “The trend of growing demand for CPUs should be for the rising tide to lift all boats,” he says. Morningstar recently raised its fair value estimate for AMD by 50%. The broader AI infrastructure buildout may also create demand for technologies that investors had largely written off as mature.
“Both traditional and legacy technologies are becoming very hot and potential bottlenecks for AI,” Colello says. At the same time, AI forecasts remain highly uncertain. “We don’t think Agentic AI is in the late innings in any way. It’s probably still in the first inning of usage.”
That uncertainty cuts both ways. Demand could exceed expectations, but investors are already paying for substantial future growth. “We have a very high fair value uncertainty rating because everything I just mentioned can move significantly,” Colello says.
Intel Stock Remains Overvalued Despite Growing Market Size
Reflecting the growing CPU and agentic AI infrastructure boom, Morningstar raised its fair value estimate for Intel to USD 90 per share from USD 60.
One of the key drivers was AMD’s recent dramatic reassessment of its forecast for the CPU server market, doubling its market size estimate to USD 120 billion from USD 60 billion. According to Colello, the speed of that revision illustrates how quickly demand expectations have changed: “For all of these companies, and how often they speak with customers, how close they are with the Microsofts and Googles of the world, for them to double the market in six months, it just speaks to how quickly this rush of agentic AI has come in.”
The trend is more than a short-term spending cycle. “Although the market’s maybe been on this for a couple of months because both stocks have run up significantly, I think what AMD validated this week is that this is not just a one- or two-year trend. This is a five-year trend,” Colello says. That said, he thinks Intel’s price may not fully reflect the risks ahead. The stock has recently traded in slightly overvalued territory.
Bulls Say
- Intel is one of the largest semiconductor companies in the world and still holds a leading share in the PC and server processor markets.
- The Intel Products business segment has an innovative, profitable design team, and shifting more production to TSMC might let it fend off recent market share losses.
- Intel Foundry is one of only three companies that can come close to building leading-edge processors. Additional financial support might enable the business to emerge as a viable manufacturer.
Bears Say
- There are no guarantees that Intel can execute on its manufacturing aspirations, such as the release of Intel 14A in 2028 or 2029.
- Even if Intel can improve its manufacturing road map, AMD is now a far more credible chip designer in the x86 space for PC and server CPUs, while ARM-based CPUs are a much greater threat than in years past
- Nvidia’s GPUs have captured most of the AI accelerator market, and we don’t foresee Intel making a dent here anytime soon.
