Shares of Intel (INTC +4.50%) have shot up impressively over the past year, rising 265%. So, an investment of $1,000 in Intel a year ago is now worth nearly $3,650, as of this writing.
The stunning rally in Intel stock has been fueled by a turnaround in the company's fortunes. It is becoming a key player in the artificial intelligence (AI) chip market, driven by the growing adoption of server central processing units (CPUs) for running agentic AI and inference workloads. However, the stock has run into rough weather lately.
Intel stock is down 37% after reaching a 52-week high on June 30. Should savvy investors consider capitalizing on this drop by buying this semiconductor stock in anticipation of further upside? Let's find out.
Image source: Intel.
Intel's accelerating growth points to a bright future
Intel released its second-quarter results in July. The company reported an impressive 25% year-over-year jump in revenue to $16.1 billion. What's more, Intel reported non-GAAP earnings of $0.42 per share compared to a loss of $0.10 per share in the year-ago period.
NASDAQ: INTC
Key Data Points
Intel management noted that this was the strongest revenue growth the company had reported in over 15 years. CEO Lip-Bu Tan attributed the semiconductor specialist's strong performance to robust demand for its AI chips, which has exceeded supply. Specifically, Intel saw a 70% year-over-year jump in its AI-focused revenue in Q2. Another important point is that its AI businesses now account for 70% of the top line.
The growing demand for server CPUs is one of the biggest factors driving Intel's healthy growth. The ratio of CPUs to graphics processing units (GPUs) used in AI data centers is projected to shift to 1:1 from 1:8 earlier. Intel management noted on the company's April earnings call that the CPU-to-GPU ratio has already shifted to 1:4. The company reported a 7% year-over-year increase in revenue in Q1, suggesting that the paradigm shift in the AI data center chip market toward CPUs is creating a solid tailwind for Intel.
Financial services firm Raymond James recently noted that the server CPU market could grow at an annual rate of 44% through 2030, generating $201 billion in revenue by the end of the forecast period. Intel controls 65% of the server CPU market, according to Mercury Research. The healthy growth opportunity in this market should allow Intel to sustain its outstanding growth for the next five years.
However, Intel isn't restricting itself to just the server CPU market. The company notes that its design services business, through which it designs and manufactures custom AI processors, saw a year-over-year revenue increase of nearly 3x in Q2. CFO David Zinsner noted on Intel's July earnings call that its custom ASIC (application-specific integrated circuit) business currently has an annual revenue run rate of almost $2 billion.
Zinsner predicts that this business could hit a $4 billion run rate "in the not too distant future." More importantly, Intel estimates that custom AI processors will open a total addressable market (TAM) worth more than $100 billion for the company.
So, Intel is riding a couple of solid catalysts that should fuel solid long-term growth. That's why, if you've $1,000 in investible cash right now, you can consider putting that money into this semiconductor stock before it steps on the gas once again.
Here's how much a $1,000 investment in Intel could be in 2030
Analysts expect Intel's earnings to grow by an impressive 260% in 2026 to $1.51 per share. Consensus estimates indicate that the company will continue clocking solid bottom-line growth over the next couple of years, with its earnings growth rate poised to accelerate in 2028.
INTC EPS Estimates for Current Fiscal Year data by YCharts
Even better, analysts have become bullish on Intel's long-term earnings growth rate this year, which isn't surprising given its catalysts.
INTC EPS LT Growth Estimates data by YCharts
Assuming Intel's earnings grow at even 50% a year in 2029 and 2030 (relatively conservative compared to the consensus estimate of 69%), it could report $6.68 in earnings per share in 2030.
The tech-laden Nasdaq-100 index has a forward earnings multiple of 24. The healthy bottom-line growth that Intel can clock through the end of the decade should ideally help it trade at a premium. Assuming it trades at 30 times earnings after five years and its earnings indeed reach $6.68 per share, this AI stock could jump to $200 by 2030.
That's a potential 127% jump, meaning a $1,000 investment in Intel could be worth almost $2,300 in 2030. So, investors can consider using Intel's recent dip to buy more shares, as it has the potential to make them significantly richer over the long run.
