By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish, with key concerns being Intel's high valuation (100x forward earnings), unconfirmed catalysts like the Apple deal, and uncertainty around AI-related revenue and the shift in GPU-to-CPU ratio. While Intel's data center growth is encouraging, the panelists agree that the stock's extreme valuation leaves little room for error.
Risk: Uncertainty around AI-related revenue and the shift in GPU-to-CPU ratio
Opportunity: Potential growth in data center revenue and higher margins as agentic workloads rise
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Intel's data center and AI revenue growth has accelerated from 8% a year ago to 22%.
Management argues the rise of AI agents is pulling demand back toward the company's central processing units.
After a more than 200% run this year, the stock is no longer the bargain it was.
A year ago, Intel (NASDAQ: INTC) looked like a company investors had given up on. Its stock briefly traded below $18, its foundry business was bleeding cash, and rivals had lapped it in the race to power artificial intelligence (AI). So far in 2026, though, the chipmaker has staged one of the more improbable comebacks in big tech, with shares up about 225% as of this writing.
Plenty of headlines have fueled the move. There's a reported preliminary agreement to make chips for Apple, a tie-up with Elon Musk's sprawling "Terafab" project, and a number of significant supply deals with cloud customers. But strip those away and one argument keeps surfacing as the reason the rally could have legs: a shift in where AI workloads run that may finally play to Intel's oldest strength.
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For years, the chip conversation was about graphics processing units (GPUs) -- the accelerators from Nvidia and others that train large AI models. Intel, whose bread and butter is the central processing unit (CPU) that anchors servers and PCs, was largely left out of the story. But the CPU is suddenly becoming a key component in the AI era.
When Intel reported its first-quarter results last month, the standout wasn't the headline revenue figure of $13.6 billion, up about 7% year over year. It was the data center and AI division. Revenue there climbed 22% year over year to $5.1 billion, and the segment's operating margin more than doubled to roughly 31% from about 14% a year earlier. Notably, this was an acceleration from 9% growth in the prior quarter.
Intel CEO Lip-Bu Tan tied the improvement directly to how AI is evolving.
"For the last few years, the story around high-performance computing was almost exclusively about GPU and other accelerators," he said during the company's first-quarter earnings call. "In recent months, we have seen clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era."
Sure, training an AI model leans heavily on GPUs. But once a model is built and put to work answering questions -- a phase called inference -- and especially once AI "agents" start orchestrating tasks on their own, CPUs do more of the coordinating. Intel's chief financial officer, David Zinsner, framed it in terms of a ratio: training setups might run eight GPUs for every CPU, inference closer to four to one, and agentic work could push that toward parity or even tip the other way.
If that plays out, the addressable market for Intel's core products could expand meaningfully just as the company's manufacturing is starting to find its footing.
Tan called the demand strong enough that it's outstripping what Intel can currently supply. The company's AI-related businesses already make up about 60% of revenue and grew about 40% year over year last quarter.
The downside here, however, is the stock's valuation.
After tripling, Intel trades at well over 100 times its expected earnings for the next year -- a multiple that prices in years of the agentic shift unfolding in Intel's favor.
Meanwhile, Intel's business is still working through some challenges. On a standard accounting basis, Intel still posted a loss of about $3.7 billion last quarter, weighed down by restructuring and a write-down tied to its Mobileye unit. Its foundry unit lost roughly $2.4 billion.
Yes, the CPU comeback is a massive catalyst for the business. And the Apple report, which the company hasn't confirmed, would be a notable vote of confidence in Intel's factories if it holds up.
But a stock priced for near-flawless execution leaves little cushion if the company's foundry business fails to ramp up fast enough or if the CPU-to-GPU ratio Zinsner describes shifts more slowly than hoped. For investors tempted to chase one of this year's biggest turnarounds, the more measured move may be to wait for a price that bakes in some of those risks rather than assuming they all break Intel's way -- something I think the current valuation largely does.
With all of this said, it's always possible that Tan is even underestimating the importance of the CPU in this agentic era of AI. For this reason, investors can't rule out the possibility that the stock continues to rise from here as the business outperforms even today's bullish assumptions. So, for the aggressive investor who believes we are still in the early innings of this AI boom, it may make sense to take a small position in the stock despite the risks, building it out to a full position if the stock takes a significant hit in the future.
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Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple, Intel, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Intel's valuation above 100x forward earnings leaves minimal margin for the foundry losses and execution risks the article acknowledges but does not fully stress."
The article positions Intel's 22% data center growth acceleration and AI agent-driven CPU demand as durable catalysts after a 225% rally, yet it underplays how the $2.4B quarterly foundry loss and $3.7B net loss signal structural repair still underway. Supply constraints and unconfirmed deals like Apple leave execution gaps, while a 100x+ forward multiple assumes the CPU-to-GPU ratio shifts rapidly toward parity. This setup risks disappointment if agentic workloads ramp slower than projected or if competitors capture incremental server spend.
Sustained 40% AI revenue growth could still justify premium multiples if foundry utilization improves faster than modeled, turning today's losses into operating leverage that the market has not yet priced.
"Intel's valuation assumes the agentic CPU thesis plays out on schedule while foundry losses evaporate — but the company has a track record of missing both timelines and cost targets."
Intel's 22% data center growth and 31% operating margin are real and material — but the 100x+ forward P/E is pricing in the entire agentic CPU thesis working flawlessly. The article glosses over two critical unknowns: first, whether the GPU-to-CPU ratio actually shifts as dramatically as Zinsner suggests (inference workloads may remain GPU-heavy longer than hoped); second, whether Intel's foundry ramp succeeds — the $2.4B foundry loss last quarter isn't a one-time charge, it's structural. The Apple deal, unconfirmed, is being treated as fait accompli. Most troubling: 60% of revenue from 'AI-related businesses' is undefined. Is that real inference workload growth or just relabeling existing server CPU sales?
If agentic AI truly does push CPU-GPU parity and Intel captures even 40% of that incremental TAM while foundry losses narrow to $500M annually by 2027, the stock could be worth $200+ — making today's 100x multiple rational, not reckless.
"The current valuation of INTC assumes a flawless execution of the foundry turnaround and a dominant shift toward CPU-centric inference that ignores the structural threat of custom silicon and ARM-based competition."
Intel’s 225% YTD rally is a classic 'hope-trade' predicated on the transition from training to inference, where CPUs allegedly regain relevance. While the 22% growth in data center revenue is encouraging, the valuation is disconnected from reality. Trading at >100x forward earnings, Intel is priced for perfection in a segment where they face stiff competition from ARM-based architectures and custom silicon from hyperscalers like Amazon and Google. The foundry business remains a massive cash incinerator, and the 'agentic AI' narrative is a convenient pivot to justify a multiple that assumes Intel will capture the lion's share of inference workloads without ceding further margin to specialized accelerators.
If Intel’s foundry business achieves even moderate success with Apple or Tesla, the operating leverage could lead to an earnings explosion that makes a 100x P/E look like a bargain in hindsight.
"The stock's upside now hinges on a durable CPU-centric AI shift that is far from guaranteed, and the current price leaves little cushion for execution failures."
Intel’s rally hinges on a shift where CPUs become the coordinating layer for AI, promising faster data-center growth and higher margins as agentic workloads rise. The article’s optimistic case assumes AI inference will sustain a favorable CPU/GPU mix but glosses over uncertainty: if AI workloads remain GPU-centric or if supply constraints curb adoption, the CPU boost could fade. Valuation is extreme—north of 100x forward earnings—leaving little room for error on a prolonged misstep in foundry ramp or weaker demand. The unconfirmed catalysts (Apple/Terafab momentum) add risk; without them, the upside looks less certain.
Opposing view: AI workloads still rely heavily on GPUs for training, and even with inference, CPU demand may be modest; a slower ramp or continued foundry losses could trigger a swift re-rating.
"Ambiguity in AI revenue could reflect real strategic shifts, while unmentioned ARM edge competition threatens the CPU parity assumption behind the multiple."
Claude rightly flags the undefined 60% AI revenue, yet overlooks how this ambiguity could mask genuine inference gains if agentic workloads drive higher attach rates for Xeon processors. The greater unaddressed risk is margin compression from ARM encroachment in edge AI, which could erode the CPU parity thesis even if foundry losses narrow. Without clearer segmentation, the 100x multiple embeds assumptions about both product mix and competitive moat that remain untested.
"ARM edge competition is a red herring; hyperscaler custom silicon is the actual margin threat Intel hasn't adequately addressed."
Grok flags ARM encroachment in edge AI as margin compression risk, but conflates two separate markets. Edge inference (IoT, mobile) and data-center inference operate under different economics—hyperscalers won't abandon x86 for ARM in mission-critical workloads due to software lock-in and ecosystem depth. The real threat isn't ARM; it's custom silicon from AWS Trainium or Google TPUs capturing incremental inference spend. That's the margin pressure nobody's quantifying.
"ARM-based custom silicon provides a power-efficiency advantage that threatens Intel's core data center margins regardless of software lock-in."
Claude, your dismissal of ARM in the data center is dangerous. It isn't just about 'ecosystem depth'—AWS Graviton is already eroding Intel's margins by offering superior performance-per-watt for standard cloud workloads, freeing up budget for hyperscalers to buy more GPUs. Intel isn't just fighting for CPU share; they are fighting to remain the default choice. If agentic workloads demand massive scaling, Intel's power-hungry x86 architecture is a structural disadvantage against ARM-based custom silicon.
"The undefined AI revenue bucket could hide non-incremental demand, making the 100x valuation risky without clear, incremental AI-driven margin growth."
Responding to Claude: The '60% AI revenue' label is more risk than nuance—it's a camouflage for potentially cyclical CPU sales being relabeled as AI. If this bucket contains legacy revenue or light AI-related services, the expected margin lift from agentic workloads may never materialize. Add persistent foundry losses and uncertain Apple catalysts, and the stock's 100x P/E looks fragile unless the AI revenue proves truly incremental.
The panel consensus is bearish, with key concerns being Intel's high valuation (100x forward earnings), unconfirmed catalysts like the Apple deal, and uncertainty around AI-related revenue and the shift in GPU-to-CPU ratio. While Intel's data center growth is encouraging, the panelists agree that the stock's extreme valuation leaves little room for error.
Potential growth in data center revenue and higher margins as agentic workloads rise
Uncertainty around AI-related revenue and the shift in GPU-to-CPU ratio