Intel Corporation (INTC) saw its shares decline approximately 2% in early trading Wednesday, settling at $118.23, as a resurgence in short selling casts a shadow over the chipmaker's remarkable six-week rally that has added over $440 billion to its market capitalization. The pullback comes after a period of extraordinary gains that had investors questioning the sustainability of the upward momentum.
The session opened at $124.05 and fluctuated between $117.46 and $126.55, according to market data. Despite the decline, Intel remains well above its late March lows, having nearly tripled in value since then, according to Reuters data.
Short Sellers Circling
Data from S3 Partners, reported by Bloomberg, indicates that short interest in Intel is near a 52-week high, with bearish traders facing paper losses exceeding $12 billion. Matthew Unterman, managing director at S3 Partners, described Intel as a “poster child for the momentum trade,” warning that “at some point, the momentum’s going to stall.”
The elevated short interest reflects growing skepticism about the stock's valuation, which now trades at over 100 times forward earnings—roughly five times its decade-long average. The consensus analyst price target stands near $85, implying a potential 34% decline from Monday's close.
Semiconductor Sector Dominance
Intel's performance is part of a broader semiconductor surge that has reshaped the U.S. equity market. Chip and chip-equipment companies now account for 18% of the S&P 500's weighting, and according to Michael O'Rourke of JonesTrading, roughly 70% of the index's $5.1 trillion year-to-date gain has come from semiconductor and memory stocks.
The Philadelphia Semiconductor Index has surged 64% since March 30, far outpacing the S&P 500's 17% climb. This concentration raises concerns about market vulnerability should the semiconductor rally falter.
Potential Apple Boost
Bulls have found encouragement in reports that Intel has secured a preliminary agreement to manufacture chips for Apple Inc. (AAPL), according to a Wall Street Journal report cited by Reuters. Such a deal would be a significant win for Intel's foundry business, which manufactures chips for third-party clients. Apple currently relies heavily on Taiwan Semiconductor Manufacturing Company (TSM) for its chips, competing for capacity with AI leaders like Nvidia (NVDA) and Advanced Micro Devices (AMD).
Neither Intel nor Apple has commented on the report, and details about which Apple devices might use Intel-made chips remain undisclosed.
Earnings and Outlook
Intel's first-quarter results provided some support for bulls. Revenue rose 7% year-over-year to $13.6 billion, with adjusted earnings of $0.29 per share. The company guided second-quarter revenue between $13.8 billion and $14.8 billion. CEO Lip-Bu Tan highlighted growing demand for Intel CPUs, wafer capacity, and advanced packaging as artificial intelligence inference and agentic AI applications gain traction.
However, the company posted a GAAP net loss of $3.7 billion in the first quarter, with adjusted free cash flow negative by $2.0 billion, underscoring the financial challenges of its turnaround efforts.
Valuation and Risk
Peter Tuz, president of Chase Investment Counsel, cautioned against the stock's parabolic move, telling Reuters, “Anytime you see parabolic moves in anything, you have to ask yourself, are things getting too ebullient here?”
Prediction markets on Polymarket show no expectation of a joint venture between Intel and TSM being announced before July, with the contract tracking that outcome holding steady at 0% for “Yes.”
Intel's stock is now driven by multiple narratives: the potential Apple partnership, the broader AI buildout, U.S. government support for domestic chip production, and hopes that its struggling manufacturing unit can attract external clients. With limited margin for error, the coming weeks will test whether the rally has further room to run.
