When my friend and colleague Alan Knuckman first recommended buying INTC call options a year ago, I thought he’d taken leave of his senses. I could hear the old Intel Inside jingle from the 1990s, when the Pentium was the fastest processor on the planet, and no one could explain former CEO Andy Grove’s monumental success. It was a company that another 90s stalwart, Nvidia, had long overtaken.

And yet, here we care.

While bulls like Alan were rightly planting flags on every data center in Texas, I kept pointing at the cracks: power grids that can’t keep up. Capex bills that look like phone numbers. Permits stuck in some county clerk’s drawer for two years. And a war whose consequences still haven’t been felt. The whole “AI buildout forever” story struck me as a bit too neat and far removed from the likes of INTC.

That story isn’t dead. But Intel’s latest quarter just put a stake through the loudest version of my bear case.

The Numbers Don’t Lie

Intel just printed a clean beat on both the top and bottom line. Revenue in the quarter reached $13.58 billion, up 6.9% year-over-year, topping analyst estimates by $1.15 billion, while adjusted EPS came in at $0.29, exceeding expectations by $0.28.

What was the market’s reaction? One of the biggest one-day moves in the company’s history. The stock finished Friday’s trading session up 23.60%.

INTC’s weekly chart.

A stock doesn’t jump over 20% because things are “fine.” A stock jumps like that when the cash flow path, and hence, the narrative, resets. Wall Street woke up and realized it had the wrong model in the spreadsheet.

The engine of this reset is called “Data Center and AI.” Revenue growth in that segment stepped up into the 20-something percent range year-on-year. That’s miles ahead of what the Street had penciled in.

A few quarters back, the best Intel could say about its data center business was “stabilization.” Now we’re talking about scarcity-driven growth. We’re on an updated timeline.

Why This Matters

INTC’s management came right out and tied the beat and the upbeat guidance to AI demand. This wasn’t a PC fluke or some one-off shift that flatters one quarter and disappears the next.

This was a statement on restructuring.

AI workloads, especially inference and the more complex agentic AI that everyone is now building, are driving real, multi-year demand for CPUs, not just Nvidia’s GPUs.

For years, Wall Street treated Intel as a cyclical PC proxy with a free AI call option attached. After this print, that frame is broken. The Street is starting to see Intel as a core way to own the next phase of AI infrastructure. INTC is now a different stock with a different multiple.

Delays and Scarcity

The bear case wasn’t pulled out of thin air.

Data center cancellations, power bottlenecks, permitting delays, and hyperscalers walking away from leases are all real.

But Intel’s quarter taught me something: project-level mess and component-level scarcity can coexist.

That is, the buildout can look like a chaotic construction site at the macro level, while the core suppliers underneath it still enjoy years of strong demand and pricing power. The chip guys still get paid.

That’s a better view of how this thing actually works.

We’re moving into Phase 2 of the AI capex cycle. In Phase 1, it was all about GPUs and raw training capacity. Phase 2 is broader. CPUs sit alongside GPUs. Full-stack systems matter more than any single chip. Diversified compute beats a one-trick pony.

Against just about every smart person’s expectations, INTC has just credibly written itself back into the script. Not as the star, but as a veteran character actor who makes the plot move.

What This Means for You

First, don’t be afraid to change your mind. The people who stay rich for decades are the ones who update their beliefs in light of new facts. The people who go broke are the ones who marry their old thesis and ride it into the ground.

Second, be careful about the “AI bubble” trade. Parts of this market are still silly. Hyperscaler capex plans will be cut, and there will be writedowns. But the idea that the whole AI buildout is one big house of cards? That’s now a much harder argument to make. The earnings are showing up. The CPUs are selling.

Last, watch the second-tier names. If the buildout has truly entered phase two, it’s not just Nvidia and the obvious GPU names anymore. CPU makers, networking companies, power suppliers, cooling companies, transformer makers. The plumbing of AI is starting to print real money. That’s where I’d be spending my reading time.

Right now, I’m looking at opportunities in ServiceNow (NOW) and Hewlett Packard Enterprise (HPE). NOW has fallen out of favor (and out of bed) since early 2025. Will it reverse course? HPE is another stock that isn’t priced exorbitantly. Could it be the next in a string of 1990s resurrections?

The Bottom Line

Intel’s quarter forced me to see the picture I was missing.

That doesn’t mean I’m now a permabull cheering every press release. I’m merely marking my view to market.