Intel Stock Surged 369% on CPU Revival Intel Overlooked

Intel's stock surge in early 2025 reflected a disconnect between narrative and reality. Investors had been transfixed by the company's direct assault on the GPU-accelerated AI training market via its Gaudi chip, which faltered—management admitted slower-than-expected uptake in late 2024 and killed the next-generation version in early 2025. That failure seemed to confirm Intel's irrelevance in the AI era. Yet management had been laying out a different thesis on earnings calls since October 2024: as the AI industry matured, the conversation would shift from training (GPU-dominant) to inference (CPU-centric), where Intel's Xeon server CPU would play a central role. The CEO explicitly called out Xeon as the "head node of choice in AI servers" in a world moving toward "much more CPU-centric" workloads.

This thesis remained largely unpriced until April 2025, when fiscal Q1 results confirmed it. The company beat guidance, and the CFO directly attributed the beat to "hyperscaler demand for host CPUs for AI servers." Revenue for the Data Center and AI segment came in above expectations. The quiet narrative had materialized in the income statement—Intel's oldest and most dominant product, thought to be obsolete, had become essential to the newest technology trend. The stock's volatility beforehand, with implied volatility sitting in the 35th percentile of its annual range weeks before the rally began, reflected how underpriced this opportunity had been.