The recent rally in the Nasdaq Composite index has led to a parabolic jump in Intel (INTC +0.53%), with its shares rising an incredible 66% since March 30.
The Nasdaq Composite index has gained an impressive 17.7% during this period, driven by signs of a potential de-escalation in the conflict in the Middle East. The improving market sentiment has rubbed off positively on Intel stock, with the semiconductor giant adding more than $137 billion to its market cap during this period. However, the stock's terrific surge isn't just because of the broader market's recovery.
Let's see what has been driving Intel's impressive rally lately and what lies in store for investors following this surge.
Image source: Intel
A string of positive developments has powered Intel's latest rally
Intel was a top-performing stock in 2025, as the market rewarded the company for its turnaround efforts. And now, the company's latest partnerships with Alphabet's Google and Elon Musk's Terafab project are driving investor enthusiasm.
On April 9, Intel announced that Google Cloud will use its latest Xeon 6 central processing units (CPUs) to run AI workloads in its data centers. Importantly, Intel will supply multiple generations of its CPUs to Google over the long term as part of a multiyear collaboration. What's more, Google and Intel are also working on a custom AI processor, known as an infrastructure processing unit, to make more efficient chips for hyperscaler applications.
This was the second major piece of news for Intel investors last week. The first one was the company's revelation that it will be a part of Elon Musk's Terafab project, a semiconductor fabrication plant to manufacture a whopping 1 terawatt of computing power annually.
NASDAQ: INTC
Key Data Points
The initial investments in this project are expected to be in the range of $20 billion to $25 billion. Bernstein estimates that the overall investment in Terafab could reach a staggering $5 trillion. With Intel set to become a part of this massive project, the chipmaker could see a significant jump in its revenue in the long run.
So it's easy to see why investors have been buying this semiconductor stock hand over fist of late. But has Intel gotten ahead of itself?
The company needs to justify the valuation
Investors will do well to note that Intel's rally has made the stock expensive. It's trading at a massive 904 times earnings, while the forward earnings multiple of 135 isn't cheap, either. It will have to report a solid set of results on April 23, or its shares could drop substantially, just as they did in January this year following weaker-than-expected guidance.
However, savvy investors could treat any pullback as a buying opportunity. That's because it is expected to deliver outstanding earnings growth.
Data by YCharts.
The company's recent partnerships suggest that its earnings could indeed grow substantially, which is why accumulating Intel on the dip could be a smart long-term move.
