INTC Stock Just Jumped 4% Because of Elon Musk — Here’s the Full Story

A picture that went viral on X caused the stock of a $265 billion company to drop by 4% during a single trading session. It depicts Elon Musk and Intel CEO Lip-Bu Tan shaking hands. Not too long ago, these two men would have had very little professional reason to be in the same room. There wasn’t much to say in the caption. Enough was said by the handshake. The company that essentially invented modern computing, Intel, has joined Musk’s Terafab initiative to design, fabricate, and package chips for SpaceX, xAI, and Tesla after spending more than five years watching competitors eat its lunch. Tuesday’s closing price of INTC stock was $52.91, up over 4%. It increased even more on pre-market Wednesday.

You must keep in mind where Intel was not too long ago in order to comprehend why this is important. The stock was trading close to $17.17 a year ago. For Intel, whose Santa Clara campus once seemed to be the epicenter of the technological universe and whose processors drove the devices that connected the modern world. As is always the case, the decline had been gradual at first, then abrupt. At the precise moment that the demand for data-center chips surged worldwide, Intel reduced its manufacturing capacity. Nvidia filled that void and didn’t look back. AMD was able to stabilize. Additionally, Intel, which formerly dominated the chip industry, was struggling to stay relevant in a market it once controlled.

Intel Corporation

The Terafab deal is the most recent in what has quietly turned into a significant run of successes for the company under Lip-Bu Tan, who took over and went straight to reducing expenses, firing employees, and—above all—rebuilding the foundry business one partnership at a time. Nvidia is currently a manufacturing client. Apple, Google, and Amazon may be approaching agreements, according to unverified reports. And now Musk has selected Intel as a manufacturing partner for his most ambitious project to date, despite the fact that his companies together account for some of the world’s most aggressive chip demand. Even if the underlying financials are still struggling, it’s difficult to ignore the growing momentum.

It is worthwhile to comprehend Terafab itself. In order to close the gap between design teams and fabrication, SpaceX, xAI, and Tesla would be able to design and manufacture chips on a single integrated campus in Austin, Texas, which Musk unveiled in March. The goal is astounding: one terawatt of processing power per year, designed to power SpaceX’s planned network of AI-capable satellites, Tesla’s robotaxi fleet, and its Optimus humanoid robot. These aren’t goods for consumers.

These are mission-critical, industrial-scale systems that require chips made to tolerances that most commercial fabs don’t care about. According to the announcement, Intel’s role is to “refactor” the technology used in chip factories, thereby strengthening and improving the production process. That’s the kind of fundamental engineering work that determines whether a fabrication plant truly operates at scale but doesn’t make headlines.

For their part, Morgan Stanley analysts are exercising caution. They called Terafab a “herculean task” and predicted that actual chip production would probably not start until at least mid-2028. That is a reality check, not a dismissal. It is truly difficult to build a new class of semiconductor facility from scratch in Austin at the scale Musk is describing while also producing chips that satisfy space and autonomous vehicle reliability requirements. Timelines could slip. Additionally, the partnership itself may indicate something significant about Intel’s position in the hierarchy of American chip manufacturing, independent of any production schedule.

This story is further complicated by the US government’s involvement. In order to support American semiconductor manufacturing, the Trump administration acquired an approximately $9 billion equity stake in Intel. The federal government owned 8.4% of outstanding shares as of late March, excluding warrants that could increase that percentage. It is not a passive investment. A government’s investment in a company of that magnitude is a statement about strategic priorities, and all of Intel’s partnerships take on a slightly different quality. The Terafab agreement neatly fits into a larger initiative to keep cutting-edge chip production within American borders, giving Intel a political advantage that Nvidia and AMD, who rely heavily on TSMC in Taiwan, just don’t have.

Nevertheless, Wall Street continues to formally rate this stock as a hold, with a 12-month price target of $47.23. That is below the current trading level of INTC. Analysts seem to be waiting for revenue growth to appear in the actual numbers rather than in press releases and handshake pictures, and for the earnings story to catch up with the partnership story. Despite the significant EPS beat, Q4 2025 revenue was still down year over year. The stock’s recovery from $17 to $53 is genuine. To be honest, it’s still unclear if the company has completely turned around. However, the trajectory is now certain.