Intel surges 214% in six weeks, with shorts losing over 10 billion still "fighting to the death," Wall Street warns of 34% correction potential

Intel’s stock price has surged more than double since the end of March, creating a market miracle while pushing short sellers into massive losses—yet this has not stopped them from continuing to bet on a decline in the stock price.

According to S3 Partners data, Intel’s stock has risen 214% from its low on March 30th to now, with a market value increase of over $440 billion, and short book losses exceeding $12 billion. Despite this, Intel’s short positions as a proportion of float remain near a 52-week high. Last week, Intel’s stock soared 25% in a single week, marking its best weekly performance since January 2000, and continued climbing on Monday to hit a new all-time high.

The latest catalyst for this rally is reports that Intel has reached a preliminary agreement with Apple on chip manufacturing. Since early April, Intel has become the best-performing stock in the S&P 500, with gains even surpassing those of the strong-performing Sandisk Corp. during the same period. Meanwhile, analyst expectations for Intel’s adjusted earnings per share in 2026 have more than doubled over the past month.

Shorts increase bets against the trend, gambling that momentum will top out

Despite ongoing losses on paper, short sellers have not retreated. S3 Partners data shows that Intel’s short positions as a percentage of float remain near a one-year high.

Matthew Unterman, Managing Director at S3 Partners, said, “Intel is now almost a benchmark for momentum trading. Momentum will eventually stall at some point.”

However, shorting against the trend is extremely costly. Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF, warned, “Trying to identify the top in momentum stocks is fundamentally unrealistic, and risk control is impossible. Shorts fighting the price trend will suffer significant excess returns losses and will find it hard to maintain a stable portfolio in the short term.”

Bearish sentiment is also spreading to other chip stocks. S3 data shows that Micron Technology and Powerchip Semiconductor, which rank second and third in gains within the Philadelphia Semiconductor Index since late March, have seen rising short positions. The Philadelphia Semiconductor Index has gained nearly 60% since early April, with the relative strength index (RSI) recently hitting its highest level since 2011, indicating the entire sector is severely overbought.

Fundamental improvements provide support, but valuations have reached extremes

Intel’s recent rally is not purely driven by momentum; there are substantive fundamental improvements as well. The U.S. government took a stake in Intel last summer, and AI chip giant Nvidia followed with a $5 billion investment in September. In March, Intel announced that its new Xeon chips were used in a Nvidia system, causing the stock to jump significantly. Weeks ago, management issued sales guidance that far exceeded Wall Street expectations, further boosting market confidence.

However, these fundamental improvements have not alleviated valuation pressures. Intel is currently one of the ten most highly valued stocks in the S&P 500 and is among the most expensive chip stocks on the market. Its stock price implies a forward P/E ratio exceeding 100 times over the next 12 months, not only the highest in history but also about five times its 10-year average. In comparison, Nvidia’s forward P/E ratio is approximately 24 times.

Thomas George, portfolio manager at Grizzle Investment Management, holds Intel shares and said, “If growth accelerates, this high multiple could quickly become reasonable. If AI leads to higher efficiency, usage will increase, and demand will follow.”

Wall Street target prices suggest significant downside potential

Despite the bullish market sentiment, Wall Street as a whole remains cautious about Intel stock.

According to Bloomberg data, out of 53 analysts tracking Intel, only 17 have a buy rating, and 3 have a sell rating. The average target price is about $85, implying roughly 34% downside from Monday’s close, making it the weakest among the Philadelphia Semiconductor Index components in expected returns.

George believes that over the next 12 months, there is a considerable probability of a sharp correction in high-momentum stocks like Intel, with declines possibly reaching 30%. But he also notes that the dual support from stock momentum and fundamentals makes timing such a correction extremely difficult.

“Companies see AI as a matter of life and death and will not stop investing and building,” he said. “As a short seller, you cannot stand against this force.”

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