Intel Stock Jumps 18% in Two Days on AI Inference Chip Demand

Intel Corp.’s stock surged nearly 18 percent over two trading sessions, as investors bet on the chipmaker’s position to dominate the next phase of artificial intelligence computing. The stock closed up nearly 13 percent on a recent session and continued its climb with a nearly 5 percent gain in pre-market trading on May 6, driven by growing demand for chips optimized for AI inference.

"The CPU is reinserting itself as the indispensable foundation of the AI era," Intel CEO Lip-Bu Tan said on a recent earnings call, highlighting a market shift that favors the company’s core strengths. "Artificial intelligence is now moving into the real world toward more distributed inference and reinforcement learning workloads."

The rally reflects Intel’s strengthening position in a market moving beyond training massive AI models to using them in real-world applications. This inference stage requires power-efficient, cost-effective processing, where Intel’s server CPUs and custom Application-Specific Integrated Circuits (ASICs) excel. The company holds a dominant 71 percent share of the server CPU market, and its custom ASIC revenue almost doubled year-over-year in the first quarter, with sales accelerating to an annual run rate of more than $1 billion.

This renewed focus on inference could unlock significant growth for Intel, a stark turnaround after its revenue remained flat at $53 billion in 2025. Analysts now anticipate consistent double-digit percentage growth over the next three years, potentially challenging the market dominance of rivals like Nvidia Corp. and Broadcom Inc. in the AI space.

Inference Era Creates CPU Resurgence

The AI industry is undergoing a critical transition. While the initial boom was fueled by training large language models—a task dominated by the parallel-processing power of GPUs from companies like Nvidia—the focus is now shifting to inference. Inference, the process of using a trained model to make predictions on new data, has different hardware requirements. According to Deloitte, inference workloads are projected to consume two-thirds of all AI computing power by 2026, up from 50 percent last year.

This trend plays directly to Intel’s strengths. The company’s Xeon server CPUs are a foundational component of data centers, and major players are taking notice. Alphabet's Google has a multiyear contract to use Intel's ASICs and Xeon CPUs. Even Nvidia, the leader in AI training chips, is integrating Intel's Xeon CPUs into its upcoming Rubin rack-scale server systems. Futurum Research estimates the market for CPUs in AI data centers could grow at a 28 percent annualized rate through 2028.

Valuation and Future Growth

Investors are recalibrating Intel’s future prospects based on this industry shift. While the company’s stock trades at 8.7 times sales—slightly above the tech sector average of 7—its growth trajectory could justify a higher multiple. Analysts project Intel's revenue could reach $71 billion by 2028.

If the company achieves that revenue target and commands a valuation of 10 times sales, its market capitalization would approach $710 billion, representing a 48 percent upside from current levels. Given that demand for its AI-related chips is reportedly exceeding supply, some analysts believe the company could grow even faster than current consensus estimates suggest, potentially leading to greater returns for investors.

This article is for informational purposes only and does not constitute investment advice.