Sold-Out AI Chips and Growing Foundry Buzz: Is Intel’s Rally Just Getting Started?

Intel (NASDAQ:INTC | INTC Price Prediction) is experiencing a notable rally already in 2026, with the stock up 28% year-to-date, building on last year’s 84% rise. While the surge first gained traction after the U.S. government took a 9.9% stake in the chipmaker through an $8.9 billion equity investment last August, its advance lately has been driven more by Intel’s own operational progress. Its foundry business suddenly seems to be on solid footing and it is experiencing robust demand for server processors fueled by the ongoing expansion of AI infrastructure.

Yesterday, the stock jumped more than 7% even as the broader market declined, closing at its highest level in two years, and this morning shares are rising again with the market stumbling out of the gate. 

Intel’s performance followed KeyBanc Capital Markets upgrading the stock to Overweight, with a $60 price target. With the outsized gains over the past year, some investors are now weighing whether they have missed their chance to buy in.  

What’s Driving Wall Street’s Upgrade?

KeyBanc analyst John Vinh upgraded Intel based on strong artificial intelligence (AI)-related demand from hyperscalers for server CPUs. Supply-chain insights suggest Intel is largely sold out of server CPU capacity for 2026, as major cloud providers ramp up data center expansions to support growing AI workloads. This constraint could enable Intel to raise average selling prices (ASPs) by 10% to 15% across its server CPU portfolio, helping capture more value from the sustained demand.

Vinh also emphasized manufacturing gains, with the 18A process now achieving yields over 60%. These improvements underpin Intel’s goal of becoming the second-largest foundry worldwide, trailing Taiwan Semiconductor Manufacturing (NYSE:TSM) but surpassing Samsung.

Foundry Momentum and Emerging Customer Interest

Intel’s foundry operations are showing clear signs of progress. Industry reports point to early involvement from Apple (NASDAQ:AAPL) for low-end M-series processors on the 18A process, with potential shipments beginning in 2027. Ongoing discussions involve the 14A process for low-end A-series iPhone chips around 2029. Such partnerships, if finalized, would bring meaningful revenue while strengthening Intel’s reputation as a credible external foundry provider.

At CES 2026, Intel unveiled Panther Lake — its first consumer product on the 18A node, branded as Core Ultra Series 3. Early feedback on these processors has been encouraging ahead of wider availability later in the month, with systems from partners expected to reach the market starting Jan. 27. Broader industry supply challenges at competitors are also creating openings for Intel to secure additional foundry business.

Shifting Sentiment on Wall Street

Analyst views are turning more positive, reflecting concrete execution in manufacturing, favorable AI tailwinds in the server segment, and initial traction with foundry customers. This marks a departure from earlier worries about foundry losses and timeline slips. With hyperscaler demand remaining elevated and capacity tight, expectations point to solid revenue growth and better pricing dynamics through 2026.

While the consensus outlook on Intel stock is still a sell, more have moved to the buy column in the past month, with five analysts now rating shares a buy compared to just two 30 days ago. Melius Research just weighed in with a Buy rating and a $50 price target — above the $36.69 per share consensus — and KeyBanc echoed that sentiment, but with a $60 per share target.

Key Takeaway

The durability of Intel’s rally will depend on its ability to maintain progress on its  foundry, successfully ramp 18A production, and meet server demand without major disruptions. Over the coming year, Intel is supported by its sold-out capacity and potential ASP increases. If Apple commitments and other customer wins take firmer shape, additional upside remains possible. Competition remains fierce, and any production setbacks could moderate gains.

The chipmaker’s stock has reached multi-year highs based on verifiable strides in its foundry’s yields, strong AI-driven server demand, and an improving analyst outlook. The 2026 supply constraints, pricing opportunities, and growing customer interest indicate potential for further progress so long as it continues to execute. 

 While competitive pressures remain, Intel’s turnaround looks like it has legs, and taking at least a small position in the stock seems completely warranted.