The stock price has nearly doubled, and the market is betting on Intel's "comeback."

The capital market is re-embracing Intel, driving its stock price to nearly double this year. Catalyzed by massive external investments and a brief performance rebound, investors seem to be betting that this chip giant is "too important to fail."

According to a previous article from Wall Street Insight, Intel reported better-than-expected third-quarter earnings, turning a profit and ending the company's six consecutive quarters of losses, which is its longest losing streak in 35 years. As a result, the company's stock price rose about 7.7% in after-hours trading. So far this year, Intel's stock has risen nearly 0%.

The trigger for this wave of optimism began in August this year. In less than three months, Intel secured nearly $16 billion in funding from the U.S. government, Nvidia, and Japan's SoftBank Group. Although this funding diluted some equity, it bought valuable time for Intel's transformation and became the key fuel igniting its stock price surge.

However, for investors, the real test lies in whether this funding can help Intel address its fundamental issues. It must prove that it can not only survive but also effectively compete with industry leader TSMC in the cutting-edge chip manufacturing sector. Currently, there remains a significant gap between the market's gamble and the company's reality.

Massive Investment and Performance Rebound

Intel's stock price has risen over 90% this year, with most of the gains occurring after August. At that time, the U.S. government announced it would provide Intel with $8.9 billion in grants, converting it into company equity. Shortly thereafter, former competitor Nvidia also announced a $5 billion investment and established a close chip development partnership, while Japan's SoftBank Group invested $2 billion.

With strong capital support, Intel released its profitable third-quarter earnings report. The report showed that the company's revenue exceeded expectations, with a net profit of $4.1 billion, completely reversing last year's net loss of $16.6 billion. However, some experts have pointed out that the performance rebound is more attributable to the overall expansion of data centers driven by the AI boom. As GPU computing clusters still require CPU servers for coordination, the demand for traditional servers has also risen, suggesting that this external environment improvement may not stem from a fundamental enhancement of Intel's competitiveness.

Real Challenges in Technological Catch-Up

Intel has recently made some progress in chip manufacturing processes. Personal computer chips based on its advanced 18A manufacturing process have begun to roll off the production line, with widespread availability expected in January next year, while the data center version is planned for release in the first half of next year. This milestone is crucial, as the 18A process is technically comparable to TSMC's most advanced N2 process, which is expected to enter mass production by the end of this quarter But this does not mean that Intel has caught up. First, the chips currently produced using the 18A process are designed by Intel itself, rather than being products manufactured for external clients like Apple or NVIDIA. This does not prove that its foundry business has the strength to compete with TSMC. Secondly, the performance of these new chips in the real world, as well as the direct comparison results with TSMC products, remain unknown.

More critically, there is the economic viability of production. Intel's Chief Financial Officer David Zinsner admitted that although chip yields are improving in a "predictable" manner, they "have not yet reached the level required to drive appropriate profit margins," and he expects it will take a whole year to achieve the target. If the yield is too low, Intel's profit margins will be severely squeezed.

Foundry Business Faces Numerous Challenges

As the core of its transformation, Intel's foundry business is under close scrutiny from investors, but the outlook remains unclear. This business is expected to require a massive capital investment of about $100 billion, yet it has not secured any heavyweight external clients to date.

Statements from the company's management have also heightened external concerns. Intel's CEO Lip-Bu Tan has made it clear that the company will not invest in the next-generation 14A manufacturing technology unless there is meaningful external customer demand. He reiterated that the company will not increase manufacturing capacity without clear demand. This lack of confidence may deter potential customers, as choosing a chip foundry requires a significant investment of time and engineering costs, and if the supplier stops providing cutting-edge technology in the future, these investments will be wasted.

Analysts believe that Intel has also failed to make organizational adjustments that would facilitate the development of its foundry business. The company has resisted separating its manufacturing and chip design operations, which is considered a key step in eliminating growth barriers for its foundry business.

Investor Bets and Market Risks

Ultimately, the current market sentiment is based on a belief: that Intel is "too important to fail" due to its significance in national security and the U.S. high-tech economy. However, this belief does not automatically translate into success. What Intel needs most right now may be external factors beyond its control—namely, that its main competitor TSMC makes a misstep in technological advancement, but this seems unlikely to happen.

Meanwhile, there are market voices reminding investors to pay attention to the potential volatility risks of individual stocks. Recently, the gap between the VIX EQ index, which measures the volatility of individual stocks, and the VIX index, which measures overall market volatility, has reached a historical high, reflecting market tension regarding certain tech stocks. For Intel, investor patience and funding have bought it time, but to truly achieve a revival, it needs not only thorough internal reform but also a bit of luck