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Intel Corporation INTC has recently staged a strong recovery from a weak phase in 2022-2024, signaling a major turnaround fueled by partnerships and restructuring efforts. Let us see how the stock is performing now, what lies ahead, and whether it’s an appropriate time to buy the stock.

Intel stock made a huge move on Wednesday, up 11.4%, and pushed its year-to-date gains to 58.9%. In yesterday’s trading session, Intel stock closed at $58.95, its highest close in nearly five years, and extended a six-day winning streak. Intel’s shares have climbed an impressive 43.1% in the last six trading sessions.

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So, what’s behind such outsized gains? Apart from the temporary cease-fire agreement in the Middle East, optimism surrounding the company’s latest partnership with Elon Musk’s Terafab initiative lifted Intel’s stock price.

Musk’s Terafab project is one of Musk’s most ambitious infrastructure ventures since Gigafactory 1. He intends to develop a $20-$25 billion semiconductor facility at Giga Texas. The planned semiconductor plant will be capable of generating around 1 terawatt of computing capacity annually and bring together Tesla, Inc. TSLA, SpaceX, and xAI into a unified artificial intelligence (AI) hardware hub. Through Terafab, Musk aims to consolidate all aspects of the chip-making process, including design, fabrication, memory and packaging, in a single place.

So, what’s in store for Intel? Since Terafab aims to establish large-scale production for cutting-edge AI chips, the demand for Intel’s process technology is expected to increase, strengthening its foundry business. After all, Intel is one of the few companies globally that has expertise in chip fabrication, production and packaging. Also, being part of the Terafab project provides Intel with a reliable, long-term partner for its fabrication services, supporting long-term revenue growth and enhanced profitability.

No doubt, the Musk deal has lit a fire under Intel stock, but skeptics may argue that the euphoria is already priced in, leaving the stock under pressure to sustain its lofty levels. However, that isn’t the case! From a technical perspective, Intel’s shares are currently trading well above the long-term 200-day moving average (DMA) and the short-term 50 DMA, signaling an uptrend.

Technical Indicator & Overlays - Intel

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There are also other factors driving optimism for Intel stock. The company recently bought back the 49% stake it had previously sold to Apollo Global Management in its Ireland manufacturing facility, Fab 34, which was originally sold to fund its manufacturing initiatives. By regaining full ownership of the plant, Intel has demonstrated its financial strength and can now retain all the revenues and margins.

The Fab 34 produces advanced chips used in data centers and AI servers, so having full control means Intel can better manage supply and capitalize on growing AI demand. The $14.2 billion repurchase also indicates a stronger balance sheet.

Nonetheless, NVIDIA Corporation’s NVDA investment in Intel has become a shot in the arm for the company to advance the development of its state-of-the-art process nodes, including the new 18A process. At the same time, CEO Lip-Bu Tan’s aggressive measures to restructure the company’s finances and progressive business strategy are beginning to show positive results.

Intel’s positive momentum appears sustainable over the long term, driven by strategic partnerships and full fab ownership, and a strengthening operational and financial outlook. The company is also showing bullish technical signals. Therefore, it's prudent for savvy investors to consider Intel stock, which currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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