Intel (NASDAQ:INTC) shares surged this week after a bullish upgrade that reignited investor hopes in the chipmaker. KeyBanc boosted Intel to “Overweight,” pointing to AI infrastructure as a powerful near-term growth engine. With its server CPUs nearly sold out for the year, Intel is reportedly considering a 10–15% increase in average selling prices (ASPs). At the same time, progress in its 18A manufacturing node has analysts warming to Intel’s foundry ambitions. The company might even land Apple as a customer for low-end Mac and iPad chips starting in 2027—a move that would put it squarely in contention as a top-two global chip manufacturer. Still, it’s not all smooth sailing. Execution risks and stiff competition from AMD and TSMC loom large. And at current levels, the rally assumes a lot has already gone right. The question is: can Intel really deliver?
Server CPU Demand Is On Fire
Intel’s server CPU business is having a moment—and that moment might just stretch through 2026. Thanks to surging demand for AI infrastructure, Intel’s data center chips are reportedly close to sold out for the year. That kind of scarcity has opened the door to potential ASP hikes of 10–15%, which could be a significant margin booster.
The boom in AI data centers has created renewed need for general-purpose compute. Intel’s Xeon chips, especially the latest Granite Rapids generation, are well-suited for these workloads. Whether it’s inference at the edge or orchestration in the core, CPUs are playing a crucial role in this next phase of the AI buildout. According to management, power efficiency and total cost of ownership (TCO) are top priorities for hyperscalers, areas where Intel is trying to reclaim lost ground.
If the Intel AI chip boom 2026 continues to gain momentum, the company could benefit from the underinvestment in traditional compute that occurred while GPUs grabbed headlines. With capacity constrained and demand exceeding expectations, Intel’s server business is finally in a position to flex its pricing power.
Foundry Ambitions Are Starting To Look Credible
For years, Intel talked a big game about becoming a foundry powerhouse. Now, for the first time, it might actually have a path. The 18A manufacturing node, which underpins Intel’s next-gen Panther Lake chips, is reportedly hitting predictable yield milestones. The Arizona-based Fab 52 is up and running, and production should scale meaningfully by 2027.
What makes this shift more compelling is Intel’s willingness to act like a real foundry. That means showing customers high yields, predictable roadmaps, and letting them lead the design cycle—a change in mindset from its product-first history. Intel Foundry also scored a major collaboration with NVIDIA to connect x86 CPUs to NVLink GPUs, potentially unlocking new AI system designs.
If these moves hold, Intel could leapfrog Samsung to become the second-largest advanced chip manufacturer behind TSMC. The combination of internal demand and external contracts may provide the scale needed to bring foundry margins up. As the Intel AI chip boom 2026 unfolds, foundry credibility could be the most important long-term driver.
Apple Foundry Deal Would Be a Game Changer
Intel might finally be going back into Apple products—not with modems or CPUs, but as a foundry partner. According to recent reports, Apple is in line to use Intel’s 18A process for low-end Mac and iPad chips starting in 2027. Talks are even underway to use Intel’s 14A process for iPhone chips by 2029.
This is a big deal. Apple is the most demanding semiconductor customer in the world. If it trusts Intel with silicon, that says a lot about the company’s manufacturing chops. It would also give Intel consistent, high-volume business to support utilization and profitability in its fabs.
Intel has been working to build trust with customers—and nothing would signal success more than a recurring, long-term Apple relationship. It’s also strategically important: Apple chips could be a major anchor for Intel Foundry, giving the company the scale to compete with TSMC in both cost and efficiency. In the context of the Intel AI chip boom 2026, Apple is less about AI directly and more about what it enables—foundry scale, credibility, and consistent returns.
Execution Risks & Valuation Are Still Concerns
While Intel has plenty of momentum, the risks are far from trivial. Execution remains a major overhang. Intel’s history is littered with missed timelines and manufacturing delays. Even with progress on 18A, yields aren’t yet at cost-efficient levels. Panther Lake chips will be expensive to produce in the near term, and ramping volume without margin dilution is a tricky balancing act.
Competition is also heating up. AMD’s server CPU revenue is projected to grow at least 50% this year. TSMC continues to extend its lead in advanced nodes. If demand for AI infrastructure normalizes or shifts more to GPUs, Intel could be left scrambling once again. And while the Intel AI chip boom 2026 is real, it’s possible the market is already pricing in perfection.
On that note, valuation multiples have skyrocketed. Intel’s LTM EV/EBITDA has jumped to 26.3x, and its forward P/E is now above 111x. Free cash flow yield remains negative at -2.1%, with the company trading at over 48x forward FCF. For a business still undergoing a multi-year turnaround, these numbers imply a lot of optimism.
Final Thoughts: High Hopes, High Stakes
Intel has made undeniable progress. Its near-sellout of server CPUs and the potential for ASP increases point to a strong position in the AI infrastructure race. The Intel AI chip boom 2026 is real, and the company is more strategically relevant than it has been in years. Foundry credibility is rising, and a potential Apple deal would mark a milestone.
But risks remain. Execution missteps, demand normalization, or competitive misfires could undo much of this momentum. Intel’s valuation—with LTM EV/EBITDA at 26.3x and forward P/E over 111x—suggests expectations are already sky-high. Investors should appreciate the turnaround but keep their eyes wide open. There’s upside here, but it’s already priced like a done deal.
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