Shares of Intel (NASDAQ:INTC | INTC Price Prediction) are up 8% in early trading Wednesday, changing hands near $120 after closing Tuesday at $110.80. The catalyst is a late Tuesday report that Intel is in talks to acquire AI chip startup Tenstorrent.
The move extends what has already been one of the most powerful large-cap rallies of the year. Intel stock is now up 200% year to date and 418% over the past year, riding momentum from a turnaround story that keeps adding chapters.
Today’s reported deal news lands on top of a fresh Citi price target hike earlier this week, amplifying the narrative that Intel is rebuilding credibility in dedicated AI silicon. Investors are treating the Tenstorrent headline as confirmation that Intel CEO Lip-Bu Tan is willing to use M&A aggressively to close the gap with NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).
Tenstorrent Talks Spark the Premarket Pop
Intel is reportedly in talks to buy Tenstorrent, the AI accelerator startup led by legendary chip designer Jim Keller. The deal “would expand Intel’s capabilities in dedicated AI hardware and talent” and “highlights Intel’s focus on AI chips beyond its existing product roadmaps and earnings cycle.”
Tenstorrent builds RISC-V based AI accelerators, a credible alternative architecture to the GPU-dominated stack. Keller’s resume includes prior work at Advanced Micro Devices (Zen architecture), Apple (NASDAQ:AAPL) (A4/A5 chips), Tesla (NASDAQ:TSLA) (Autopilot silicon), and Intel itself, so a reunion would carry both strategic and symbolic weight.
For Intel, the appeal is straightforward. The Gaudi accelerator line failed to take meaningful share in AI training, and Tenstorrent offers both a product roadmap and elite design talent in one package. Nothing is confirmed yet, and no deal price, structure, or timeline has been disclosed.
The AI Strategy Context Behind the Run
The Tenstorrent talks slot into a broader Intel comeback thesis. Intel’s Q1 2026 results, filed April 23, showed Data Center and AI segment revenue up 22% year over year to $5.05 billion, with non-GAAP gross margin expanding to 41% from 39%. The company also reported its sixth consecutive quarterly revenue beat per its SEC filing.
Strategic wins keep stacking up. Intel has a multiyear deal with Alphabet‘s (NASDAQ:GOOGL) Google for Xeon deployment and custom ASIC IPU co-development, and Intel Xeon 6 was selected as the host CPU for NVIDIA’s DGX Rubin NVL8 systems. On Monday, Citi raised its Intel price target to $130 from $95 with a Buy rating, citing a new “agentic CPU” total addressable market thesis.
The Bull and Bear Read on Valuation
The disagreement here is real. Citi’s $130 target implies more upside, anchored by agentic CPU demand, foundry traction, and the AI accelerator optionality a Tenstorrent deal would create. Insider activity supports the bull case, with 71 recent insider transactions skewing net buying.
The bear case is equally clear. Intel shares trade 26% above the $87.86 analyst consensus price target and 90% above estimated fair value. Intel still carries a trailing EPS of -$0.59 and a forward P/E ratio of 135x, leaving little room for execution slips after a 62% one-month surge.
What to Watch Next
The immediate question is whether the reported Tenstorrent talks produce an actual announcement, and if so, what price tag and integration cost commentary accompany it. Any official confirmation would also bring scrutiny on how Tenstorrent’s RISC-V roadmap folds into Intel’s existing AI accelerator plans.
Beyond the deal, investors will weigh whether momentum can absorb the valuation stretch flagged by consensus models. Prudent investors may consider trimming position size into strength, while those building exposure could wait for either a confirmed deal structure or a pullback toward the rising 50-day moving average. The next Intel earnings update will be the cleanest test of whether the AI narrative is translating into durable margin expansion.
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