Intel stock surges over 40% in September, raising valuation concerns

Intel just had the kind of month that makes long-suffering shareholders feel vindicated and new buyers feel nervous. The chipmaker’s stock climbed more than 40% in September 2026, capping a year-to-date gain north of 200%.

The stock peaked above $127 intraday before settling around $123 at month’s end. One session on September 21 delivered a 12.14% single-day pop.

What’s actually driving the rally

Two forces converged to light a fire under Intel shares. The first was Meta Platforms’ rollout of its Muse AI agent, which turbocharged market expectations for data-center CPU demand. The second catalyst came from CEO Lip-Bu Tan, who told investors that Intel could currently meet only about 50% of existing CPU demand.

Q2 2026 revenue came in at $16.1 billion, representing a 25% year-over-year increase. Foundry progress added another layer, with potential partnerships including discussions with SK Hynix on memory-chip manufacturing. Analyst upgrades followed. Melius Research lifted its price target to $165.

The valuation problem nobody wants to talk about

Intel is now trading at more than 60 times forward earnings. The stock had previously traded as high as $142 earlier in 2026 before pulling back. The $165 Melius target implies roughly 34% upside from September’s close.

Intel’s comeback in context

Lip-Bu Tan took the helm with a mandate to make the foundry strategy profitable. The 25% revenue jump in Q2 showed that demand for Intel’s products was genuinely accelerating. Nvidia remains the dominant force in AI training chips. AMD has carved out meaningful share in data-center CPUs.

Investors considering an entry at these levels should watch whether Intel can sustain revenue growth above 20% in the coming quarters, and whether its foundry business moves from cash drain to cash generator. Without both, the stock at 60-plus times forward earnings is essentially a leveraged bet on AI demand continuing to accelerate.