Intel set for record high as AI-driven CPU demand powers upbeat forecast

By Rashika Singh

April 24 (Reuters) - Intel INTC.O shares jumped more than 22% in premarket trade on Friday as the chipmaker's robust revenue outlook signaled strong demand for the hardware needed to run advanced AI models.

If gains hold through close, the shares are set to hit a record high for the first time since 2000, surpassing their dotcom-era peak. At around $81 per share, the chipmaker's valuation would rise about $75.3 billion.

Intel missed the early AI boom after failing to challenge Nvidia's NVDA.O GPUs and falling behind Taiwan Semiconductor Manufacturing Company 2330.TW in advanced manufacturing, but demand for powerful central processing units (CPUs) for advanced AI systems is opening a new window.

"The growing recognition of the role CPUs are playing in agentic AI workloads is a big factor," said Bob O'Donnell, president and chief analyst at TECHnalysis Research.

"If the foundry business can start contributing in a meaningful way in 2027—as expected—that should really show that company's turnaround is complete."

CEO Lip-Bu Tan, brought in after years of missteps left Intel trailing in AI, has pushed asset sales, job cuts and cost controls, while securing backing from the U.S. government and partners such as SoftBank 9984.T and Nvidia to support its manufacturing push.

Intel shares have nearly tripled since the Trump administration announced its stake in August.

The rally lifted sentiment across broader chip stocks. Rival Advanced Micro Devices AMD.O rose 7%, while U.S.-listed shares of TSMC TSM.O gained 3%.

Intel forecast second-quarter revenue above Wall Street expectations on Thursday, with at least 14 brokerages raising their price targets on the stock following the results, according to data compiled by LSEG.

Chief Financial Officer David Zinsner said part of the forecast reflected higher chip prices, while warning that execution risks in manufacturing could limit how much demand Intel captures.

HSBC analysts said growing demand for Intel's Xeon server CPUs, which power data-center workloads including AI inference, could prove a key driver of Intel's comeback.

FOUNDRY BOOST FROM TESLA DEAL

Earlier this week, Intel scored a symbolic boost to its contract manufacturing ambitions, securing Tesla as a customer for its next-generation 14A chipmaking process tied to Elon Musk's planned Terafab AI chip complex.

Zinsner declined to disclose financial terms of the deal, saying details were still being finalised.

Ryuta Makino, analyst at Intel investor Gabelli Funds, said confirmation that Tesla plans to use Intel's 14A manufacturing process was a "huge win" for the chipmaker's bid to build a contract manufacturing business that can eventually rival TSMC.

Intel last traded at around 90 times its 12-month forward earnings - its highest on record - much higher than AMD and Nvidia, which were last trading at 37.2 times and 22.1 times their 12-month forward earnings, respectively.