Intel stock (NASDAQ:INTC) is back in the spotlight after Nvidia (NASDAQ:NVDA) officially completed a $5 billion equity investment in the legacy chipmaker. The transaction, first announced in September and finalized this week, makes Nvidia roughly a 4% shareholder in Intel through a private placement of more than 214.7 million shares at $23.28 each.

That purchase price sits about 36% below Intel stock’s recent trading levels, giving Nvidia a sizable paper gain almost immediately. More importantly, the deal signals strategic alignment between two companies that were once viewed strictly as rivals. For Intel, the investment provides both capital and credibility after years of execution missteps and cash-intensive manufacturing expansion.

The agreement received regulatory clearance from the Federal Trade Commission earlier this month. Alongside the equity investment, the companies announced plans to collaborate on custom data center and PC products, including Nvidia-designed x86 CPUs for AI infrastructure and hybrid system-on-chips that pair Intel CPU cores with Nvidia RTX GPU chiplets.

Notably, Nvidia has not committed to shifting GPU production away from Taiwan Semiconductor Manufacturing Company (NYSE:TSM), meaning Intel’s foundry ambitions still face an uphill climb.

Why Intel Stock Has Surged in 2025

Valued at roughly $175 billion, Intel stock has already returned nearly 90% in 2025, making the Nvidia investment feel partly priced in. Still, the rally reflects renewed optimism around demand fundamentals, particularly in servers.

Despite strong end demand, Intel is struggling with manufacturing bottlenecks, undershipping its 10 nm and 7 nm chips for PCs and servers. These older nodes still account for the bulk of Intel’s production volume. CFO John Pitzer recently said supply constraints could peak in Q1 2026 and ease gradually, suggesting Intel stock may remain constrained by execution rather than demand.

Ironically, server shortages are worse than PC shortages, which is a silver lining for Intel stock because servers carry higher margins. Several trends are driving this server demand:

• Hyperscalers delayed traditional server refreshes while prioritizing AI infrastructure.

• Power constraints are forcing upgrades, as newer servers offer up to 80% better power efficiency than five-year-old systems.

• The shift from large language model training to agentic AI is increasing demand for traditional computing workloads.

Technology Progress and Cultural Reset

On the technology front, Intel’s 18A process node remains a critical swing factor for Intel stock. The company shipped its first Panther Lake chip on schedule by year-end, but yields are still below expectations. Early ramp costs are also pressuring margins, which remains a concern for investors.

However, new CEO Lip-Bu Tan, who joined in March, is attempting to address deeper cultural issues. Intel has flattened its management structure from more than 10 layers to just five or six. Engineers now sit on the executive staff and are directly involved in customer discussions. A four-day-per-week return-to-office policy has also been implemented to accelerate decision-making and execution.

These changes may not move Intel stock overnight, but they improve the odds of sustained operational improvement.

Intel Stock Valuation and Price Targets

Looking ahead, analysts expect Intel revenue to grow from $52.55 billion in 2025 to $74 billion by 2029. While gross margins are projected to remain under pressure in the near term due to 18A ramp costs and pricing actions, profitability is expected to improve meaningfully over time.

Adjusted earnings per share are forecast to rise from $0.34 in 2025 to $2.84 by 2030. Free cash flow remains a weak spot, with an expected $11 billion outflow between 2025 and 2026 as Intel continues heavy capital spending. That said, free cash flow could rebound sharply, improving from $640 million in 2027 to $4.32 billion by 2029.

If Intel stock trades at 25x forward earnings, in line with its 10-year average, shares could potentially double over the next three years, assuming execution improves.

Wall Street remains divided. Of the 42 analysts covering Intel stock, most rate it a “Hold.” The average price target of $36.74 sits close to the current trading price, suggesting limited near-term upside after the 2025 rally.

Should You Buy Intel Stock Now?

Nvidia’s $5 billion investment is a powerful confidence signal, but it does not eliminate Intel’s risks. Manufacturing execution, margin pressure, and heavy capital requirements remain real challenges. At the same time, server demand, cultural reform, and long-term earnings recovery provide a credible bull case.

For conservative investors, Intel stock looks more like a hold after its sharp run-up. For patient investors willing to tolerate volatility and focus on a multi-year turnaround, pullbacks could offer more attractive entry points.

Bottom line: Nvidia’s backing strengthens Intel’s long-term narrative, but Intel stock is no longer a bargain. Future returns will depend less on headlines and more on consistent execution.