Intel Corp (NASDAQ:INTC) is expanding its advanced-packaging research as AI systems demand faster connections between chips. On July 24, the company announced a memorandum of understanding with China-based Lens Technology to explore glass substrate packaging for future AI and data center workloads. Intel is also developing optical glass couplers and detachable connectors designed for co-packaged optics, which are still at the research stage.
I think these efforts could position Intel to benefit as AI systems require faster, more power-efficient connections between chips. However, the company still needs to turn its technical progress into commercial products and customer orders. If you want to find out the 8 stocks that are even better than Intel, you can read the full post here: Top 10 Co-Packaged Optics (CPO) Stocks to Buy in 2026.
AI Growth and Advanced Packaging Could Strengthen Intel’s Bull Case
In my view, CPO adds another potential growth driver to an Intel business that is already showing signs of improvement. Second-quarter revenue rose 25% YoY to $16.1 billion, while Data Center and AI revenue jumped 59% to $6.3 billion. However, Intel also reported an $11 billion GAAP net loss, highlighting the gap between its improving operating momentum and reported profitability. The CEO’s comments support my view. Lip-Bu Tan identified advanced packaging and the foundry network as opportunities to capture AI-driven growth. Intel also reported growing customer interest in its EMIB-T advanced packaging technology, with a growing backlog and plans to ramp production to support customer programs in 2027. The company hasn’t named the customers behind that backlog, and it raised its 2026 capital spending outlook to more than $20 billion. I think this gives the company a more credible path into the broader AI hardware supply chain. Intel’s AI opportunity is growing, though its path still depends on execution and heavy investment. For investors willing to consider more volatile names, here are 10 high-beta stocks with strong revenue growth.
Intel’s Valuation Leaves Less Room for Execution Mistakes
Intel trades at a premium to its historical valuation, but I think its AI and advanced-packaging opportunities could justify that premium. Its forward non-GAAP P/E of 67.48x is about 9% above its five-year average of 62.01x, while its forward price-to-sales ratio of 8.56x is nearly 168% above its historical average of 3.19x. The higher sales multiple suggests investors are already pricing in a meaningful improvement in Intel’s prospects. However, if its earnings recovery continues and its foundry and advanced-packaging businesses gain traction, the current valuation could become easier to justify. For investors who believe Intel can execute on its AI strategy, I think the potential upside makes the stock worth considering, although they should be comfortable with the execution risk.
Hedge funds were already leaning in. Funds holding Intel rose from 112 in Q1 to 138 in Q2. The value of their stakes more than tripled from $8.7 billion to $28.1 billion. Clearly, Intel is quite popular among hedge funds, and it’s not just CPO that is driving its potential. As long as America wants to win the AI race, Intel will be at the center of it. That itself is the company’s most bullish thesis
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