Intel (NASDAQ:INTC) shares have nearly tripled this year, outrunning AMD (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and the Philadelphia Semiconductor Index’s nearly 75% climb. On August 10, the company said it would sell $15 billion of new stock to fund its push into contract chip manufacturing, and shares fell more than 4% in early trading. That marked a significant shift for a company experiencing a notable operational turnaround in the semiconductor sector.
Bull Case: The AI Boom Finally Shows Up In The Numbers
Intel’s data center and AI segment grew revenue 59% year-over-year in the second quarter, accelerating from 22% growth in the first quarter, as the shift toward AI agents pushed CPU demand past what Intel’s factories could supply. Total revenue rose 25% year over year, the fastest pace in more than 15 years. Nvidia chose Intel’s Xeon 6 platform to host its DGX Rubin NVL8 systems, evidence that even AI’s biggest winner still needs Intel’s chips. Margins are catching up to the growth: operating margin jumped to 39.5% from 16.1% a year earlier, and gross margin rose to 41.8% from 29.7%. Adjusted net income, which excludes one-time charges, climbed from $1.5 billion in the first quarter to $2.2 billion in the second, alongside $7.0 billion of operating cash flow.
The foundry side is landing real customers too. Foundry revenue grew 31% to $5.8 billion, and Intel committed to high-volume production on its 14A process in 2028, after once warning the technology could be shelved. Tesla (NASDAQ:TSLA) signed on as a 14A customer, and hopes for a second marquee client grew after President Trump said Apple (NASDAQ:AAPL) would make processors with Intel, though neither side confirmed it.
Bear Case: The Bill For All That Growth Keeps Climbing
That growth is not free. Intel’s capex totaled $12.1 billion over the trailing 12 months and is accelerating, with management raising this year’s guidance from $18 billion to $20 billion in July and warning that 2027 spending will be “significantly above” this year’s levels. The foundry unit meant to justify that spending still lost $2.1 billion in the quarter. Investors have not been forgiving: Intel shares fell 35.4% in July as a broader chip sell-off wiped out $1 trillion of value across the 20 largest semiconductor companies, and the stock dropped more than 8% the day second quarter results came out.
The reported losses add to the unease, even if the accounting behind them is unusual. Intel’s trailing 12-month net loss runs about $11.3 billion, driven mostly by a $12.5 billion non-cash charge tied to shares held in escrow under its CHIPS Act agreement. As investment director Russ Mould put it, Intel spent the 2010s “wrecking its own balance sheet” with $82 billion of buybacks, which is part of why raising equity now, after the stock’s five-fold climb since last August, “makes perfect sense.”
What The Positioning Data Shows
Hedge fund ownership rose to 112 funds last quarter from 96 the quarter before, pointing to accumulating institutional conviction. Short interest is just 2.4% of the float, a level that shows little organized skepticism. Yet the stock trades at 80 times forward earnings as of August 10, a multiple that already assumes the turnaround keeps compounding. That combination, rising ownership against a stretched multiple, helps explain why a $15 billion share sale landed as unwelcome news rather than routine financing.
Where This Leaves Investors
Intel’s turnaround case rests on real numbers: accelerating AI demand, expanding margins, and a foundry business finally landing customers like Tesla. The counter case is just as real, since capital spending is climbing faster than foundry profits and the stock already prices in years of execution that haven’t happened yet. The $15 billion raise cuts both ways, funding the buildout while diluting shareholders at a moment the market was already nervous enough to sell the news.
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