Shares of Intel (INTC) are once again in the Wall Street spotlight after a powerful rally that saw the stock rise more than 17% in a single day. On Tuesday, the shares gained 13% and reached a record $110, and after the main session closed, they rose another 4.76%.
The reason for this move was quickly found. Traders bet that Intel could play a bigger role in working with Apple (AAPL), especially as chip manufacturing in the U.S. is becoming increasingly important for the largest tech companies.
The rally began after reports that Apple is in talks with Intel and Samsung about producing key processors for its devices in the U.S..
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For many years, Apple relied on the world's largest chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), so any significant capacity inside the U.S. is immediately seen by the market as a big plus.
Apple Gave Intel Traders a New Reason to Hype the Story of American Chip Factories
Several events preceded the surge. Intel just closed its best month in all 55 years since its Nasdaq debut. In April, the stock rose by 114%, and the company's market cap exceeded $470 billion.
Several major deals also helped the rally. Intel expanded its partnership with Google from Alphabet (GOOGL). In addition, the company confirmed its participation in Elon Musk's Terafab project. At the same time, Intel agreed to buy the remaining 49% of the Fab 34 plant in Ireland for $14.2 billion.
Separately, the market continues to hype the AI theme. During the first-quarter report, Intel CEO Lip Bu Tan said that processors remain an indispensable foundation of the AI era. The market quickly picked up on these words, since Intel had spent several years trying to recover from manufacturing issues while other chipmakers were faster to gain ground in the AI sector.
But something else is more important for the market. Intel is no longer seen as a company without prospects. Since last August, when the U.S. government bought 10% of Intel through an $8.9 billion investment, the company's shares have risen by more than 330%.
Right now, chip stocks are trading with almost as much volatility as crypto, which is a very significant move.
Trump Says INTC Rally Has Already Brought $45 Billion to the U.S. Thanks to the Government Stake in the Company
Trump directly links Intel's growth to his policies. Last week, he wrote on Truth Social:
“Intel shares keep rising. I am very proud of this company because it is thanks to me that the U.S. has made more than $30 billion just on these shares over the past 90 days.”
On Monday, Trump posted another message:
“I made $45 billion for the U.S. in 8 months!”
He attached a chart from the White House showing the growth of the government's investment in Intel.
The U.S. government's stake in Intel has grown to $97 billion. Source: Truth Social / Donald Trump
Since the beginning of the year, Intel has already risen by about 200%, becoming the best-performing company in the PHLX Semiconductor Index.
Interest in the stock is also fueled by talk of contracts with major tech companies. Previously, the shares had already risen on expectations that Apple and Alphabet might use Intel Foundry for chip production.
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Technical traders are also continuing to bet on INTC. One analytics platform is now showing a “100% BUY” signal for Intel shares based on 13 short-, medium-, and long-term indicators.
In addition, the shares are trading above key moving averages, which usually indicates the presence of large buyers in the market.
There is also noticeable activity in the options market. For contracts expiring on August 21, the upper target is around $142. The options market allows for another 31% upside from current levels. At the same time, Intel is not currently paying dividends.
Meanwhile, analysts are taking a noticeably more cautious view. The average analyst rating remains at Hold, and the average target price is just below $80.
Essentially, analysts are allowing for more than a 25% drop from current levels and believe the rally in Intel shares may have already gone too far.
