For years, Intel (INTC -9.20%) was a big disappointment to shareholders. In fact, for a rull five years shares of the semiconductor giant traded in a range between $22 per share and $26 per share. The stock was unable to break out during this time because of ongoing fears about a possible erosion of its core business. Intel is very reliant on the personal computer, which makes up the bulk of its business, and throughout its rough patch, Intel couldn't demonstrate an ability to get its chips into tablets, mobile devices, or other higher-growth areas.

It seems like just within the past few months, all that has changed. Shares of Intel broke out in a major way in 2014, and soared from $25 per share at the start of the year to their current level of $34 per share. Fortunately, Intel is seeing stabilization in PCs, and is reaping the benefits of investment in emerging product areas.

Here's why Intel shares are surging so far this year, and whether the stock still has further room to run.

PC turnaround gaining traction
Intel is seeing stabilization in the PC market, which is very important for the company since its PC business still represents about 62% of Intel's revenue. Fortunately, Intel managed its third consecutive quarter of year-over-year PC unit growth last quarter. This was driven by what management describes as the "end-of-life" of Windows XP.

Going forward, Intel is counting on the ongoing PC refresh cycle to continue to fuel results in its most important business. During the last quarterly conference call, Intel stated that 600 million PCs are at least four years old, and that the company is seeing a refresh cycle strengthen particularly well in the enterprise market. Management believes its line of Bay Trail chips will pay off handsomely, because of their smaller size which results in lower costs. Bay Trail now accounts for more than 60% of its Pentium and Celeron mix, and nearly 20% of its notebooks.

This is also fueling growth in new areas like data centers, where Intel can secure market share without sacrificing margins. Intel's data centers business grew revenue by 19% year over year and produced record revenue of $3.5 billion, thanks in large part to the recent launch of the Xeon E7 processor.

Growth expectations rising
While Intel has undoubtedly enjoyed strong growth in some exciting new areas, such as the Internet of Things and Data Centers, along with a stabilizing PC market, there may be reason for caution. One of the things Intel stock had going for it heading into 2014 was that it was a cheap stock. As previously mentioned, Intel shares did almost nothing for several years. The company remained highly profitable, which resulted in a very attractive valuation. Now that Intel shares have soared on the expectation of future growth, there are much higher expectations embedded into its valuation.

It's worth noting that Intel's earnings estimates for this year don't exactly seem to fit the profile of a 32% rally. After all, Intel projects 5% revenue growth this year. Intel previously expected relatively flat revenue. This announcement was one of the major catalysts that caused Intel's valuation to expand so significantly this year. While it's great to see Intel returning to top-line growth, it's debatable whether 5% revenue growth justifies such a tremendous rally.

It seems that Intel itself is trying to temper expectations. On the company's investor relations website, Intel states in its business outlook section that the company is in a "quiet period" in terms of providing forward-looking results. Intel goes on to state that, "None of the forward-looking statements in the earnings press release, including in the Business Outlook section, should be considered as the current expectations of Intel." This could perhaps be an indication that the company is trying to calm analysts, who may be over-zealous with their rising earnings estimates.

Analysts currently forecast Intel to earn $2.19 per share this year, which would represent approximately 16% growth versus the previous year. If Intel doesn't meet this ambitious projection, the stock could see its rally halted.