After a sharp pullback over the last several trading sessions, semiconductor stocks are staging an impressive rebound on Tuesday as investors return to AI-related names ahead of a busy week of earnings.
The Philadelphia Semiconductor Index (SOX) is surging nearly 5%, with broad-based gains across Intel INTC), Micron MU), Marvell MRVL), AMD AMD), Nvidia NVDA), and other chipmakers helping to lift the broader Nasdaq.
The rally appears to reflect renewed optimism following last week's sector-wide correction, improving sentiment surrounding AI infrastructure spending, and investors positioning ahead of several closely watched technology earnings reports.
For Intel, the improving backdrop comes at an important time. To that point, the chipmaker has enjoyed a remarkable turnaround this year but has also experienced heightened volatility as investors evaluate whether its foundry ambitions, AI initiatives, and manufacturing roadmap can support a sustained recovery.
With Intel set to report Q2 earnings after market hours on Thursday, July 23, investors may be wondering if now is an opportune time to buy INTC, which has soared more than 350% over the last year to outperform all of its aforementioned chip peers outside of Micron.
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Intel’s Optimistic Q2 Expectations
Wall Street is expecting another meaningful step forward in Intel’s turnaround.
The Zacks Consensus Estimate calls for Q2 revenue of approximately $14.4 billion, representing 12% year-over-year growth.
On the bottom line, Intel's Q2 adjusted earnings are projected to come in at $0.21 per share, a dramatic improvement from a loss of -$0.10 a share in the year-ago period.
Investors will likely focus on several key themes during the earnings call:
Progress of Intel's 18A manufacturing process Growth within the Data Center & AI business Updates on Intel Foundry customer wins Outlook for the second half of 2026 Management's commentary regarding enterprise AI demand and capital spending
Perhaps most importantly, investors will want reassurance that Intel's turnaround remains on schedule and that its manufacturing investments are beginning to translate into sustainable financial improvements.
The Zacks ESP
Optimistically, the Zacks ESP (Expected Surprise Prediction) indicates Intel could once again surpass earnings expectations, with the Most Accurate and recent estimate among Wall Street analysts having Q2 EPS slated at $0.22 and slightly above the underlying Zacks Consensus of $0.21 (Current Qtr below).
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This comes as Intel has impressively exceeded earnings expectations in three of its last four quarterly reports with an average EPS surprise of 996.88%. Intel most recently reported Q1 adjusted net income of $1.5 billion or $0.29 per share, which crushed EPS expectations of $0.01.
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AI and Foundry Progress Remain the Biggest Catalysts
While Intel continues to face intense competition from AMD and Taiwan Semiconductor TSM), the company's long-term investment thesis has become increasingly centered around two opportunities: expanding its AI portfolio and rebuilding its semiconductor manufacturing leadership.
Recent announcements surrounding Intel's expanding AI ecosystem and growing enterprise partnerships, including with Nvidia, have reinforced confidence that management is making tangible progress.
Meanwhile, continued improvements in manufacturing yields and increased production on Intel's next-generation process technologies could eventually position the company as a more competitive foundry alternative for third-party chip designers.
If management delivers encouraging commentary regarding foundry customer demand and AI-related revenue opportunities, earnings estimate revisions could continue trending higher following the report.
Summary & Conclusion
Although Intel still has work to do before fully re-establishing itself as a semiconductor leader, the company's turnaround appears to be gaining momentum.
Improving profitability, rising earnings estimates, AI-related growth opportunities, and continued progress within its foundry business all suggest Intel is moving in the right direction and starting to grow back into its valuation after a sharp rebound.
Naturally, Thursday's earnings report could introduce additional volatility, especially with options markets pricing in a sizable post-earnings move. However, if management delivers another solid quarter and reinforces confidence in its long-term roadmap, INTC could have further room to run.
For now, Intel stock currently sports a Zacks Rank #1 (Strong Buy), indicating favorable earnings estimate revisions and suggesting INTC may warrant consideration ahead of Q2 results.
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Intel Corporation (INTC): Free Stock Analysis Report
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).