Intel Rises 100.5% in a Year: Should You Invest in the Stock?

Intel Corporation INTC has gained 100.6% over the past year compared with the industry’s growth of 51.6%. It has outperformed compared to the Zacks Computer & Technology sector and the S&P 500.

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The company has outperformed its peer, NVIDIA Corporation NVDA, but underperformed Advanced Micro Devices AMD. AMD has surged 103.8%, while NVIDIA has gained 55.3% during this period.

INTC Gains from AI-Related Demand, Product Innovation

Intel is benefiting from solid demand in the Data Center and AI group. The company reported the fastest sequential growth in the data center business this quarter. It reported revenues of $4.7 billion, up 15% sequentially, with an operating margin of 26.4%. The growth is primarily driven by Xeon server CPUs, which are Granite Rapids, Emerald Rapids and Sapphire Rapids. Per a report from Grand View Research, the AI infrastructure market was valued at $223.45 billion in 2024 and is expected to witness a compound annual growth rate of 30.4% by 2030. Intel, with its robust portfolio, is expected to gain from this market trend.

AI clusters require massive interconnect bandwidth. High networking demand in the AI buildouts is driving growth in the custom Application-Specific Integrated Circuit (ASIC) business. The company is gaining solid traction in the hyperscaler business. Its ASIC business grew more than 50% in 2025, 26% sequentially and reached an annualized revenue run rate greater than $1 billion in the fourth quarter. Diversification beyond the Xeon business is a positive.

Its Client Computing Group is also benefiting from healthy traction in the AI pc market. AI PC shipments grew 16% year over year in the fourth quarter. Intel AI chips are now powering more than 200 notebook designs. The AI PC market is expected to grow substantially in the upcoming quarters, backed by rapid digital transformation initiatives across sectors. Intel’s leading-edge Core Ultra Series 3 processors are expected to gain from this.

INTC announced a multiyear strategic collaboration with SambaNova, a leading AI inference platform and hardware provider. The partnership is set to focus on delivering high-performance, cost-efficient AI inference solutions built around Intel Xeon-based infrastructure.

Moreover, Intel has been undertaking cost control measures and organizational simplifications to boost profitability and improve cash flow generation. In 2025, Intel generated $9.7 billion of cash from operating activities compared with $8.29 billion a year ago. It reported an adjusted free cash flow of $2.2 billion in the fourth quarter.

Stiff Competition and Trade Restrictions are Key Challenges

Intel’s Foundry business remained a drag on the top-line growth. Intel’s 18A ramp costs worsen the segment’s operating margin. Despite government funding, investment from NVIDIA, and management’s strong focus on a turnaround, ensuring profitability from this segment remains an uphill task.

Despite Intel’s growing prowess in AI inference solutions, the company faces stiff competition from NVIDIA and AMD in the AI inference domain. The NVIDIA Blackwell, H200, L40S and NVIDIA RTX offer remarkable speed and efficiency in AI inference across cloud, workstations and data centers.

AMD Instinct MI350 Series GPU, featuring powerful and power-efficient cores, has set a new benchmark in generative AI and high-performance computing in data centers. With NVIDIA’s dominance and AMD’s strong momentum, Intel faces a steep and difficult battle in the AI inference domain. The company has also been facing stiff competition from AMD in the commercial PC market.

China accounted for more than 24% of Intel's total revenues in 2025, making it the single largest market for the company after the United States. However, China's purported move to replace U.S.-made chips with domestic alternatives significantly affected its revenue prospects.

Estimate Revision Trend of INTC

Earnings estimates for Intel for 2025 have moved down 15.52% to 49 cents over the past 60 days, while the same for 2026 has declined 14.04% to 98 cents.

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Key Valuation Metric for Intel

From a valuation standpoint, Intel appears to be relatively cheaper than the industry and below its mean. Going by the price/book ratio, the company's shares currently trade at 1.8 book value, lower than 26.56 of the industry average.

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End Note

Healthy traction in the data center market and growing shipments of AI PCs are the primary growth engines for the company. AI infrastructure expansion and growing AI inference workloads are expected to drive the adoption of Xeon server processors. Strong focus on innovation, efficient working capital management is expected to drive profitability and cash flow. However, the company faces stiff competition in the server, storage, commercial PC and networking markets. The negative estimate revision depicts bearish sentiments for the stock. Growing geopolitical volatility and tariff-related uncertainties remain a concern. With a Zacks Rank #3 (Hold), INTC appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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