Intel’s Microsoft Deal Fuels AI Ambitions as Stock Consolidates After Meteoric Rally

Microsoft equips Surface for Business exclusively with Intel's latest Core Ultra processors, boosting Intel's AI push despite recent stock pullback and geopolitical risks.

Microsoft has thrown its full commercial weight behind Intel, equipping the entire new "Surface for Business" lineup exclusively with the chipmaker’s latest processors. The laptops and tablets, unveiled on May 19, run on the Core Ultra 300 series — with select models featuring the flagship Core Ultra X7. According to Microsoft, the graphics performance of these chips exceeds that of an Apple MacBook Air with an M5 processor by more than a third, while a dedicated neural processing unit powers local AI workloads directly on the device. Business pricing starts at roughly $1,950.

The endorsement comes at a pivotal moment for Intel. Its stock had more than tripled in 2025 before a sharp pullback set in. By Monday, the shares had fallen for five consecutive sessions, shedding over 15% in just four trading days. Market watchers attribute the slide to classic profit-taking ahead of Nvidia’s quarterly results, with the broader semiconductor sector coming under pressure late last week. On Tuesday, the stock fluctuated around the $110 mark, a far cry from its 52-week low of roughly $19.

Despite the volatility, the longer-term trajectory remains firmly upward. Intel shares climbed more than 4% on Wednesday to €99.24, bringing the year-to-date advance to around 195%. Short sellers have been caught in the crossfire: S3 Partners estimates their paper losses now run into the tens of billions, even as the short-interest ratio hovers near a one-year high.

Wall Street analysts see further room to run. Benchmark Equity Research lifted its price target to $140, with analyst Cody Acree arguing the market underestimates Intel’s future earnings power. He notes the company’s new 18A manufacturing process is running two to three months ahead of its internal schedule. Citigroup followed with a $130 target, pointing to a shift in AI workloads: as models increasingly handle tasks autonomously, demand for traditional CPUs is surging, tipping the CPU-to-GPU ratio in data centers back in Intel’s favor.

That trend is already visible in the numbers. First-quarter revenue reached $13.6 billion, with the data-center segment growing 22% to roughly $5 billion. Adjusted gross margin came in at 41%, well above guidance. For the current second quarter, management is targeting total revenue of up to $14.8 billion.

Intel is also strengthening its manufacturing independence. In April, it completed a $14.2 billion buyout of the remaining stake in Fab 34 in Ireland, bringing one of Europe’s most advanced chip plants fully in-house. CEO Lip-Bu Tan characterized the move as a strategic advantage, especially as local AI processing raises the importance of high-performance CPUs.

The only cloud on the horizon remains geopolitics. Tighter U.S. export controls on advanced semiconductors to China are forcing Intel to constantly recalibrate its global supply chains, a factor that could temper growth in the second half. For now, though, the Microsoft deal and the 18A ramp provide a sturdy narrative of operational momentum — one the market is still digesting after a historic rally.