Intel (INTC) Rallies 70% as Google AI Deal Expands, but Analysts Still See Downside

Intel Corporation (INTC) said it will expand its long-term work with Google (GOOGL) to support the next wave of AI and cloud systems. The update shows that Intel still plays a key role in how large tech firms run AI at scale, even as the focus stays on chips like GPUs.

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The two firms plan to align across several future versions of Intel Xeon chips. These chips will run a wide range of tasks in Google Cloud, from AI system control to daily computing jobs. Google Cloud already uses Intel Xeon 6 chips in its C4 and N4 instances, which handle both AI and general workloads.

Intel CEO Lip Bu Tan said, “Scaling AI requires more than accelerators. It requires balanced systems.” This line reflects Intel’s view that AI needs more than just high-power compute chips.

In the meantime, INTC shares have rallied in 2026, rising nearly 70% year-to-date.

Focus Shifts to System Efficiency and IPUs

At the same time, Intel and Google will expand work on custom IPUs, or infrastructure processing units. These chips help move tasks like network, storage, and security work away from main CPUs. As a result, systems can run more smoothly and use less power.

Google’s Amin Vahdat said, “CPUs and infrastructure acceleration remain a cornerstone of AI systems.” This supports the idea that AI systems rely on a mix of chips, not just one type.

In addition, this move fits a wider trend across the cloud space. Firms like Amazon (AMZN) and Nvidia (NVDA) also invest in similar chips to boost data center efficiency. These parts help free up computing power and improve how systems scale.

A Steady Role in a Changing AI Market

However, the update does not point to a major new product or shift. Instead, it shows that Intel is holding its place inside Google’s setup as AI demand grows. This comes at a time when rivals like Advanced Micro Devices (AMD) and custom chip efforts at large tech firms are gaining ground.

Still, the deal highlights that CPUs remain key to AI systems, even as GPUs handle more of the heavy compute work. Intel’s role now centers on keeping systems running well, rather than leading in AI compute itself.

Overall, the news signals that Intel is staying tied to one of the largest cloud players, while also pushing into new chip roles that support AI growth.

Is Intel a Buy, Hold, or Sell?

Turning to the Street, Intel Corporation has a Hold consensus view, based on 35 analysts’ ratings. The average INTC stock price target is $50.83, indicating about 19% downside from the current price.