Intel Stock Surges on Apple Deal Buzz: Can INTC Sustain This Momentum?

According to industry grapevines, Intel Corporation INTC is likely to develop Apple Inc.’s AAPL M series chips for the latter’s MacBook Air and iPad Pro by early 2027. Although both companies’ spokespersons have refused to comment on the matter, Intel's shares flew off the shelves on the news, rising 8.7% in yesterday’s trading session. If the deal materializes, it will be a shot in the arm for Intel Foundry. With new management, Intel is undertaking a comprehensive review of its businesses to put the company back on its growth trajectory. Interim management has vouched to keep the core strategy unchanged despite efforts to drive operational efficiency and agility. The company is emphasizing the diligent execution of operational goals to establish itself as a leading foundry.INTC Betting Big on AI PCsIntel is witnessing healthy traction in artificial intelligence (AI) PCs that have taken the market by storm. The company has previewed Intel Core Ultra series 3 processor (code-named Panther Lake) and Xeon 6+ (code-named Clearwater Forest) in third-quarter 2025. Manufactured in a new, state-of-the-art factory in Chandler, AZ, both products are built on Intel 18A, the most advanced semiconductor process in the United States. Panther Lake is designed to power a broad spectrum of consumer and commercial AI PCs, gaming devices and edge solutions. Clearwater Forest is an E-core server processor that enables business enterprises to scale workloads, reduce energy costs and power more intelligent services. While Panther Lake will be available in the broad market from January, Clearwater Forest is slated to be launched in the first half of 2026. The company has introduced Intel Core Ultra, which features a neural processing unit that enables power-efficient AI acceleration with 2.5x better power efficiency than the previous generation. With superior GPU and CPU capabilities, it can speed up AI solutions. The company also launched the new vPro platform with an Intel Core Ultra processor that delivers enhanced power efficiency. With dedicated AI acceleration capability spread across the CPU, GPU and the new neural processing unit, it will unlock an endless new wave of AI experiences across all apps. This is likely to give healthy competition to NVIDIA Corporation NVDA and Advanced Micro Devices, Inc.’s AMD new GPU lineups for PC gaming.INTC Spurred by Significant Capital InfusionIntel has secured a $5 billion investment from NVIDIA to jointly develop cutting-edge solutions that are likely to play an integral role in the evolution of the AI infrastructure ecosystem. Leveraging the core strengths of both firms, namely NVIDIA’s AI and accelerated computing and Intel’s CPU technologies and x86 ecosystem, the collaboration is expected to sow the seeds of innovation through the development of state-of-the-art custom data center and PC products. In August 2025, Softbank invested $2 billion in Intel to propel AI research and development initiatives that support digital transformation, cloud computing and next-generation infrastructure. The investment enabled Softbank to gain about 2% ownership in Intel, with the former paying $23 per share. This followed $7.86 billion in direct funding from the U.S. Department of Commerce under the U.S. CHIPS and Science Act to advance critical semiconductor manufacturing and advanced packaging projects in Arizona, New Mexico, Ohio and Oregon. The significant capital infusions will enable Intel to expand its manufacturing capacity to accelerate its IDM 2.0 (Integrated Device Manufacturing) strategy.Price PerformanceRiding on such growth drivers, Intel has gained 93.5% over the past year compared with the industry’s growth of 27%, outperforming peers Advanced Micro and NVIDIA. While NVIDIA stock was up 29.4%, Advanced Micro gained 52.1% over this period. One-Year INTC Stock Price PerformanceImage Source: Zacks Investment ResearchINTC Trailing on Innovation FrontDespite the uptrend, it appears that Intel has a lot of work to do to catch up with its rivals. While most competitors evolved with changing demand patterns, Intel fell behind others as it clung to its legacy products. For example, despite making significant inroads in AI chips, Intel lagged NVIDIA on the innovation front with the latter’s H100 and Blackwell GPUs being runaway successes. This offered a competitive advantage to NVIDIA, with leading technology companies reportedly piling up NVIDIA’s GPUs to build clusters of computers for their AI work. Moreover, Intel has been facing challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. This has affected its margins. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. An accelerated ramp-up of AI PCs has significantly affected Intel’s short-term margins, as it shifted production to its high-volume facility in Ireland, where wafer costs are typically higher. Margins were also adversely impacted by higher charges related to non-core businesses, charges associated with unused capacity and an unfavorable product mix. Competitive pricing pressure from rivals has further dented its profitability.  Image Source: Zacks Investment ResearchHostile U.S.-China Trade Ties Hurt INTCChina accounted for more than 29% of Intel's total revenues in 2024, making it the single largest market for the company. However, the communist nation's purported move to replace U.S.-made chips with domestic alternatives significantly affected INTC’s revenue prospects. The directive to phase out foreign chips from key telecom networks by 2027 underscores Beijing's accelerating efforts to reduce reliance on Western technology amid escalating U.S.-China trade and tariff tensions.As Washington tightens restrictions on high-tech exports to China, Beijing has intensified its push for self-sufficiency in critical industries. This shift poses a dual challenge for Intel, as it faces potential market restrictions and increased competition from domestic chipmakers. In addition, weaker spending across consumer and enterprise markets, especially in China, resulted in elevated customer inventory levels.Estimate Revision Trend for INTCEarnings estimates for Intel for 2025 have moved down 65.2% to 32 cents over the past year, while the same for 2026 has declined 63.1% to 59 cents. The negative estimate revision depicts bearish sentiments for the stock.Image Source: Zacks Investment ResearchEnd NoteIntel's innovative AI solutions hold immense promise for the broader semiconductor ecosystem. The rumored Apple deal could work wonders for the company by establishing a sustainable and competitive foundry business with healthy manufacturing yields and acceptable profit margins. By addressing the challenges of scalability, performance and interoperability, Intel is paving the way for widespread AI adoption across enterprises worldwide. Management is focusing on simplifying parts of its portfolio to unlock efficiencies and create value. Significant capital infusion to revive its lost glory is likely to spur growth. All these efforts appear to resonate well, as exhibited by an uptrend in the stock price performance.However, the recent product launches appear “too little too late” for Intel. In addition, margin woes amid strict export restrictions, unfavorable product mix and elevated customer inventory levels weigh on its bottom line. Declining earnings estimates remain an overhang. With a Zacks Rank #3 (Hold), Intel appears to be treading in the middle of the road, and investors could be better off if they exercise caution and stay invested for long-term gains. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks