Intel Stock Rises Nearly 2% Premarket After Musk Teases Possible Chip Partnership

• Intel has been on a turnaround path this year, thanks to its restructuring efforts and the investments it has successfully attracted.
• The company’s stock received a price target lift this week, premised on rising demand from AI adoption.
• The stock’s YTD gain has outstripped rival and AI frontrunner Nvidia.

Intel Corp. (INTC) stock climbed nearly 2% in Friday’s early premarket session, buoyed by Tesla CEO Elon Musk’s comments about sourcing chips from the company. The stock may also be getting a lift from improving sentiment following Thursday’s tech backlash.

Intel’s stock has been on a strong run this year, thanks to the turnaround initiatives the company implemented under new CEO Lip-Bu Tan and the public and private investments it managed to attract.

Musk Mulls Using Intel

Speaking at Tesla’s (TSLA) annual shareholder meeting, Musk outlined his plans for artificial intelligence chips, stating that the company will transition to the next iteration of its in-house AI chip, namely AI6, within a year and double the performance metrics. The company teased its AI5 chips this week, which would power its autonomous driving ambitions. 

The billionaire said Tesla would potentially source chips from Intel. While expressing his respect for current partners TSMC and Samsung, Musk said, “Maybe we’ll work with Intel.” Despite profitability issues with its foundry business, Intel has continued to pursue it. 

That said, the Tesla CEO also hinted at building its own chip foundry. “But even when we extrapolate the best-case scenario for chip production from our suppliers, it is still not enough,” he said.

“I can't see any other way to get to the volume of chips we are looking for, so I think we will have to build a gigantic chip fab.”

What Retail Feels About Intel Stock

On Stocktwits, retail investors continued to hold a ‘bearish’ view toward Intel stock as of early Friday, and the message volume continued to stay ‘low.’ The negative sentiment may have been due to valuation concerns following the strong run-up this year and the AI pessimism that has pervaded into the tech sector and into the broader market.

As recently as this week, Tigress Financial raised its price target for the Intel stock to $52 from $45 and kept a ‘Buy’ rating on the stock, according to the Fly. The firm sees Intel as well-positioned to benefit from accelerating demand for AI-enabled PCs and data center solutions. The firm called Intel’s partnerships with Nvidia and Microsoft to power next-generation AI infrastructure "transformative."

Intel stock has gained about 88% year-to-date, outperforming the broader market and the tech sector.

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