Key insights
- A potential partnership between Apple and Intel to design and build chips in the US, supported by significant US government investment in Intel, signals a bullish development for the semiconductor sector. While Intel's valuation appears high, this strategic alliance highlights a trend towards onshoring critical technology manufacturing, potentially boosting domestic tech companies and supply chain resilience. This could positively influence related tech stocks and the broader market by indicating government support for domestic innovation and production.
A while ago, Intel (INTC 6.07%) was left for dead by the market. The market had a good reason: Its foundry business was losing a ton of money, and its chip technology was starting to lose to competitors. However, after a series of investigations from the U.S. government and other entities like Nvidia, it's starting to look like it's coming around.
The reality is that Intel is too important to national infrastructure to fade into obscurity, and getting it back into top shape was a top priority for the U.S. government. Fortunately, investors are starting to see major signs of improvement in Intel. One of those came in the form of a new deal with one of the biggest clients any company can have: Apple (AAPL 0.73%).
According to a Truth Social post by President Donald Trump, Apple has agreed to a deal to design and build chips in the U.S. with Intel. That's a major development, but does it make Intel stock a buy now?
Back on Aug. 22, 2025, the U.S. government announced an $8.9 billion investment in Intel. That kick-started a major rally in the stock, and it has risen about 440% since then. That's a solid gain so far, but after a run like that in less than a year, investors may be worried that the stock is becoming overvalued.
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Intel trades for 123 times forward earnings and 87 times 2027 earnings projections.
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That's a lot of growth already priced into the stock, and it easily raises red flags for me. However, big deals like the one potentially coming with Apple are a huge part of that hype. Currently, nearly all of Apple's chip supply comes from Taiwan Semiconductor Manufacturing (TSM 6.50%). TSMC also supplies a vast majority of the chips used in AI products, and its production capacity is being stretched thin. With Apple looking to diversify or completely change its suppliers, it opens the door for Intel into a major business opportunity. If it pans out, it could easily grow to a point that justifies Intel's current valuation.
Intel's stock was priced at a premium in anticipation of a potential major landmark deal like this, but we'll have to see what this looks like in practice, and it may be a few years before Intel can start producing Apple's chips. At the very least, it's confirmation that the Intel revival is going as planned, though I'm hesitant to recommend the stock until we see a concrete purchase agreement and know how much of Apple's business Intel will be handling. Until then, I'm comfortable sitting on the sidelines.