Intel (INTC 5.68%) stock has been surging in recent months amid a wave of positive developments that have bolstered investors' confidence in the company. The good news is that Intel has started the new year on a solid note, with the company's shares already up 19% in 2026.
The stock shot up impressively last week following President Donald Trump's positive comments about Intel's latest processors. Trump had a meeting with Intel CEO Lip-Bu Tan, which reportedly went well, as the president lauded the efforts that Chipzilla's CEO is undertaking to manufacture cutting-edge chips in the U.S.
However, will the positive news cycle eventually translate into a stronger-than-expected performance from Intel in 2026, helping the stock sustain its impressive rally? Let's find out.
Image source: Intel.
Intel's advanced chip process nodes could help it regain its mojo
Intel recently revealed its Core Ultra Series 3 processors at CES 2026. These processors are built on the Intel 18A process node, which the company claims to be "the most advanced semiconductor process ever developed and manufactured in the United States." Code-named Panther Lake, the Intel 18A process is a 2-nanometer (nm) node that's expected to help Chipzilla claw back market share from foundry giant Taiwan Semiconductor Manufacturing.
Analysts expect chips based on the 18A process to be industry-leading as far as performance and power efficiency are concerned. Importantly, Intel has already begun the high-volume production of the Panther Lake chips. According to Tom's Hardware, the chip giant is reportedly weeks -- or even months -- ahead of the high-volume production of TSMC's competing 2nm chips.
What's more, Intel points out that its Panther Lake processors will power more than 200 artificial intelligence (AI)-capable personal computer (PC) designs. The company will also launch processors for edge AI applications, such as robotics and automation, later this year.
Intel has been losing ground to rival Advanced Micro Devices (AMD 3.46%) in the PC market. AMD used TSMC's 4nm process node to manufacture its latest AI PC processors and is expected to move to a 2nm manufacturing process this year. But Intel will have a leg up over its archrival with its more powerful and power-efficient processor.
NASDAQ: INTC
Key Data Points
Even better, Intel's Panther Lake processors are receiving positive reception in the gaming community, with tests suggesting that they are capable of outperforming AMD's offerings. With shipments of advanced AI PCs expected to rise by 52% in 2026, according to Counterpoint Research, Intel's Panther Lake processor should help it capitalize on the terrific growth opportunity at hand.
The client computing group (CCG) is Intel's biggest source of revenue, accounting for 62% of its top line in the third quarter of 2025. The segment's revenue increased by 5% year over year to $8.5 billion. Since Intel has announced a solid pipeline of design wins for the 18A process node, there is a good chance that this segment will clock stronger growth in 2026 and move the needle in a bigger way for the company.
As such, don't be surprised to see Intel growing at a faster pace than analysts' expectations in 2026. However, will that be enough for the stock to climb higher, considering its valuation?
Here's why the stock can deliver handsome gains once again this year
Intel stock has jumped a whopping 130% in the past year, driven by the company's improving liquidity, its partnership with Nvidia, and cost optimization efforts that are going to help it post a profit for 2025 as compared to a non-GAAP (generally accepted accounting principles) loss in 2024.
Consensus estimates project Intel to post $0.34 per share in earnings for 2025, compared to a loss of $0.13 per share in 2024. The good news is that its bottom-line growth is anticipated to remain very impressive in 2026 and 2027.
INTC EPS Estimates for Current Fiscal Year data by YCharts
However, the red-hot run that Intel has witnessed in the past year has brought its valuation to expensive levels. It is now trading at 77 times forward earnings, a premium to the tech-laden Nasdaq-100 index's forward earnings multiple of 26. However, the rapid pace at which Intel's earnings are forecast to grow in 2026 and 2027 could help justify the premium it's trading at.
Additionally, Intel is capable of clocking faster growth in 2026 on the back of stronger growth in the client processor business. The data center business is also expected to step on the gas, as Intel could reportedly start manufacturing custom AI processors for Microsoft, based on the 18A process, this year.
So, don't be surprised to see Intel maintaining a premium valuation by the end of 2026. That could pave the way for more upside for Intel investors, which is why it would be a smart move to remain invested in this AI stock for more gains.
