With the recent news of Elon Musk's groundbreaking Terafab project, Intel (INTC) is starting to look like an even more exciting long-term investment play. Years of skepticism around Intel's manufacturing initiatives have suddenly changed with Wedbush's latest report pointing out the massive upside potential if a strategic manufacturing deal actually gets finalized involving Intel's 14A process ramp.
Scale is critical. As seen in the filings, the Terafab initiative will reportedly require an initial $55 billion investment and might grow into a total project costing upwards of $119 billion over time. Wedbush recently singled out companies benefiting from the project in light of the enormous equipment intensity involved with cutting-edge semiconductor production.
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About Intel Stock
Intel is clearly one of the most controversial semiconductor stocks right now. Headquartered in Santa Clara, California, the company produces central processing units (CPUs), artificial intelligence (AI) accelerators, networking chips, packaging technologies, and semiconductor manufacturing solutions. Despite spending years falling behind technologically, Intel's fortunes have been completely reversed in 2026 thanks to a growing focus on inference demand, packaging innovations, and domestic manufacturing.
INTC stock's performance has been truly spectacular. Shares currently trade near $116 after rallying more than 510% from the 52-week low of $18.97. The surge in shares has occurred in part because investors began to see Intel as more than merely a CPU supplier; Intel became an exciting bet on AI infrastructure and semiconductor manufacturing. In just the past five days alone, INTC stock has climbed 6% versus the S&P 500's ($SPX) gain of 2%.
www.barchart.com However, valuations for Intel have become much harder to justify with traditional measures. Intel is now valued at 11.4 times sales and around 191 times forward earnings — levels that were once unthinkable for the company just two years ago. Investors appear to be pricing Intel as an AI infrastructure player rather than an established semiconductor manufacturer.
Intel Exceeds Market Estimates as AI Demand Grows
It all comes down to the results reported for Intel's first quarter of 2026. Revenue grew 7% year-over-year (YOY) to $13.6 billion while non-GAAP EPS hit $0.29 compared to $0.13 in the prior-year quarter. The company's gross margin also saw significant improvement, with non-GAAP operating margin rising to 12.3%.
The biggest change was in the composition of growth. Revenue in the Data Center and AI (DCAI) segment increased 22% YOY to $5.1 billion, reflecting the importance of Intel's AI positioning in 2026. Company executives reiterated that the future of AI lies in inference and agentic workloads, which require CPUs, packaging, and heterogeneous computing.
Intel also saw a number of strategically important developments in Q1. First, Xeon 6 became the host CPU of Nvidia's (NVDA) DGX Rubin NVL8 systems. Additionally, Intel won a multiyear expansion of its deal with Alphabet's (GOOGL) Google. The company further announced a new partnership with SambaNova Systems involving the creation of heterogeneous systems powered by GPUs, RDUs, and Xeon.
None of this news was more important than the Terafab announcement, however. Intel recently confirmed its participation along with SpaceX, Tesla (TSLA), and xAI as a strategic manufacturing partner. While details are sparse, market participants seem increasingly convinced that Intel's 14A process might become an essential domestic AI manufacturing platform in the coming months.
However, Wedbush has advised some caution with Terafab. The firm stressed the difficulty in producing a world-leading fab based on a process node that's not yet finalized.
What Do Analysts Think of Intel?
Wall Street remains divided on INTC stock despite the recent huge gains, offering a consensus “Hold” rating. The mean target price at $82.70 implies potential downside of 29% from current levels. However, the highest price estimate of $124 suggests that shares could climb another 6% from here.
Although the mean price target implies downside, bulls point to the fact that INTC stock is no longer trading like a regular chipmaker. The market seems to be assigning strategic significance to the company's capacity, advanced packaging, AI infrastructure, and domestic semiconductor manufacturing capabilities.
www.barchart.com On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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