1 Reason Intel Stock Could Outperform in 2027
Intel's surging data center business could power another strong year in 2027, and its valuation leaves room to run.
Intel (INTC) has experienced an impressive surge this year, with its stock trading up approximately 170% year-to-date as of October 14, 2026, outpacing the S&P 500's growth of about 13%. This performance is largely driven by Intel's surging data center business, which focuses on server processors that power cloud computing and AI services.
The company's revenue in the data center and AI segment grew by 59% year-over-year to approximately $6.3 billion in the second quarter, marking its strongest revenue growth in over 15 years.
The increasing demand for AI inference applications, including AI agents, is expected to drive further growth for Intel's central processing units (CPUs). CPU shipments are expected to grow by strong double digits through 2027, with momentum potentially extending into 2028. Intel has also introduced its first server chip, the Xeon 6+, built on its new 18A manufacturing process, with production currently outperforming internal targets.
Although Intel's stock is currently trading at about 47 times next year's earnings estimates, the company's earnings are recovering from depressed levels and are projected to grow at an annualized rate of 69% over the next several years. This puts Intel's stock at a modest PEG ratio of 0.8, suggesting it may be undervalued relative to its growth potential.
Investors will have the opportunity to assess Intel's performance further when the company reports its third-quarter results on October 29, 2026. If the data center business continues to expand at its current pace, Intel's stock could outperform in 2027, presenting an attractive investment opportunity.
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