Intel’s Server Business Nears Capacity, Fueling Stock Surge

Intel shares have surged to a nearly two-year high, propelled by a significant analyst upgrade and robust demand signals from its data center division. After a prolonged period of trailing competitors, the chipmaker is showing concrete signs of a momentum shift, with its order books for server processors reportedly full through 2026.

The immediate catalyst for the rally was an upgrade to "Overweight" by KeyBanc Capital Markets, accompanied by a $60 price target. Researchers point to Intel's server CPU capacity for 2026 being almost entirely booked already. This scarcity, driven in large part by massive orders from hyperscale data center operators, is providing substantial tailwinds for the Data Center and AI (DCAI) segment.

This supply-demand dynamic is restoring a degree of pricing power that Intel has lacked. The company is reportedly planning to increase average selling prices for its server CPUs by 10% to 15%. Market readiness to accept these higher prices for high-end products indicates a strong investment cycle in digital infrastructure.

Manufacturing Milestones Offer Hope

Beyond strong sales, Intel's long-struggling foundry operations are delivering encouraging progress. The advanced 18A manufacturing process, central to the company's turnaround strategy, is hitting key milestones:
* Production yields have surpassed the critical threshold of 60%.
* The first consumer chips using this technology, codenamed "Panther Lake," have officially entered production.
* The technological gap with industry leader TSMC is narrowing, strengthening Intel's competitive position against Samsung.

Should investors sell immediately? Or is it worth buying Intel?

Market observers view rumors that technology giants like Apple are evaluating Intel's 18A and future 14A processes as a further vote of confidence in its manufacturing quality.

Stock Performance Reflects Growing Optimism

The market has rewarded this combination of operational progress and analyst praise with significant gains. Intel's stock closed yesterday at $47.29, marking a single-day advance of over 7% and establishing a new 52-week high. On a monthly basis, the shares show an impressive gain of approximately 48%.

The bullish case was reinforced by an additional buy recommendation from Melius Research. The narrative of a sustainable turnaround is gaining traction, built on the fundamental foundation of capacity booked years in advance and the technical stabilization of the 18A process. The company's ability to operationally meet these heightened expectations will be the critical next test.