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Intel shares soar as Wells Fargo cites stronger AI and data center momentum
Wells Fargo pointed to a higher average selling price for Xeon server processors, rising 48% year over year, and data center and AI gross margin at 56%.
Wells Fargo highlighted improving momentum in Intel's data center and AI business as the stock rally continued, noting that Intel is already outperforming in the current cycle compared with peers. The outlet framed Intel's turnaround around demand for server CPUs and custom AI chips that support agentic AI applications, alongside stronger recent results.
According to the analysis by Wells Fargo, Intel's most recent 10-Q showed it shipped 9% more Xeon server processors than a year earlier, while the average selling price rose 48% year over year. Wells Fargo also cited data center and AI gross margin of 56%, up 8.4 percentage points versus the prior quarter, as well as Intel's custom AI chip business with revenue that tripled year over year.
The firm further said Intel's custom AI chip business generated $1.84 billion in operating income, describing the figures as evidence of improved profitability. Wells Fargo also referenced Intel securing its first named major commercial foundry customer, Fortinet, as Intel pursues a foundry strategy to compete with Taiwan Semiconductor Manufacturing.
The story adds that Intel has continued to draw investor attention as shares run, with the article stating the company's market capitalization is $435 billion. It also notes that Intel shares trade at a forward price-to-earnings ratio of 55, down from 85 a month earlier, versus a five-year mean P/E of 11.1.