Intel surged in Monday’s trading, rallying 6% and continuing to rise by an additional 8% in after-hours trading. This uptick follows news that Intel secured a key manufacturing contract from Amazon to produce custom AI chipsets for its cloud computing division, AWS.
This agreement will see Intel design and manufacture specialized AI fabric chips using its 18A process—Intel’s most advanced chip production technology to date.
Despite this recent boost, Intel’s stock remains down more than 50% year-to-date. The Amazon contract, combined with reports of a $3.5 billion Pentagon grant for military chip manufacturing, offers a positive outlook for Intel as it works to regain lost market share in the chip industry. The wins come as Intel faces steep competition from rivals like Nvidia and AMD, particularly in the growing AI market where GPUs have dominated.
Intel’s stock performance has been volatile in recent years. After seeing a modest 6% gain in 2021, the stock plummeted by 47% in 2022, only to recover by 95% in 2023. Some analysts see these new deals as a potential turning point for the company. However, the future of Intel’s recovery hinges on its ability to execute on its ambitious manufacturing plans, including meeting production yield expectations for the 18A process, which will begin large-scale production in 2025.
While Intel’s challenges are far from over—such as a massive restructuring plan that includes laying off 15% of its workforce—its deals with Amazon and the Pentagon indicate a renewed focus on its core strengths in chip manufacturing. If Intel successfully executes these plans, some estimates suggest that its stock could rise to $30 per share, a significant improvement over its current $22 valuation.
However, failure to meet expectations could see the stock drop further, potentially down to $10 per share. Investors remain cautious as Intel continues its push to modernize its foundry business and reassert its dominance in a highly competitive sector.
With input from Yahoo Finance and Nasdaq.
