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

Core Insights - Intel is experiencing a significant stock rally, with a 28% increase year-to-date following an 84% rise in 2025, driven by operational progress and strong demand for server processors related to AI infrastructure [2][7] - The stock recently jumped over 7%, reaching its highest level in two years, following an upgrade from KeyBanc Capital Markets to Overweight with a $60 price target [3][7] Demand and Pricing - Strong AI-related demand from hyperscalers for server CPUs has led to Intel being largely sold out of server CPU capacity for 2026, allowing for potential average selling price increases of 10% to 15% [4][7] - The ongoing expansion of data centers by major cloud providers is fueling this demand, which is expected to sustain Intel's revenue growth [4] Manufacturing Advancements - Intel's 18A manufacturing process has achieved yields over 60%, supporting its goal to become the second-largest foundry globally, behind Taiwan Semiconductor Manufacturing [5] - These manufacturing improvements are critical for Intel's competitive positioning in the foundry market [5] Foundry Operations and Partnerships - Intel's foundry operations are showing progress, with early involvement from Apple for low-end M-series processors on the 18A process, potentially starting shipments in 2027 [6] - Discussions are ongoing regarding the 14A process for low-end A-series iPhone chips around 2029, which could enhance Intel's reputation as a credible external foundry provider [6]