Intel shares surge 453% as foundry ambitions outpace financial reality

Intel shares have climbed 453% over the past 12 months, a rally underpinned by an $8.9 billion US government equity investment in the company’s domestic semiconductor supply chain. The surge coincides with reported preliminary discussions between Intel and major technology firms, including Amazon, Alphabet, and Apple, regarding chip packaging and production services. These developments have bolstered market confidence in Intel Foundry’s ability to secure third-party manufacturing contracts.

Despite the momentum, analysts from The Motley Fool advise investors to consider taking profits, arguing that the stock’s current valuation has priced in successes that have not yet been realised. Intel established Intel Foundry in 2021 to manufacture chips for external customers, a strategic pivot that initially faced leadership challenges and the ousting of the executive who championed the division. While the current strategy remains focused on third-party manufacturing, the financial results suggest significant hurdles remain.

Intel Foundry reported an operating loss of $2.4 billion on $5.4 billion in revenue for the first quarter of 2026. The division must demonstrate sustained growth and operational efficiency to become a positive contributor to the broader business. Analysts note that preliminary agreements and discussions are distinct from sealed, signed purchase orders, and the company still needs to prove it can deliver high-quality output to its prospective clients.

The company’s enterprise value has risen to $568 billion, representing a multiple of 42 times its EBITDA. This valuation is significantly higher than that of industry leader Taiwan Semiconductor Manufacturing (TSMC), which trades at 24 times EBITDA. TSMC maintains its dominant position through superior production yields and expertise in high-end chip manufacturing, raising questions about how Intel can justify its premium valuation without comparable operational track records.

Political risks also present a potential headwind for the stock. The US government’s financial backing provides credibility, but the political landscape may shift during the upcoming midterm elections and the 2028 presidential election. With the stock’s upside potentially limited relative to its risks, analysts suggest that locking in profits is a prudent strategy, noting that Intel was not included in their current list of top recommended stocks for long-term growth.