KEY POINTS
- Intel jumped 10% to $109.99 after Google placed a firm order for more than 3 million tensor processing units to be manufactured by Intel in 2028.
- Nvidia is simultaneously running early trials on Intel's 18A process node for its next-generation Feynman GPU, a second major foundry validation.
- Morgan Stanley estimates the Google relationship alone could scale to 6 million units across 2027-2028, with additional customers potentially following.
Intel shares surged 10% on Monday to close at $109.99, the stock's best single-session gain in three weeks, after The Information reported that Google has committed to ordering more than 3 million tensor processing units to be manufactured by Intel in 2028. The deal represents the most concrete validation of Intel's foundry strategy since CEO Pat Gelsinger's successor began executing the turnaround plan in earnest.
This is not a pilot program or a memorandum of understanding. According to the report, Google spent months testing Intel's advanced packaging technology before placing what multiple sources described as a firm production order. The TPUs will be built using Intel's 3D Foveros packaging, with manufacturing ramping in late 2027 for 2028 delivery.
The Nvidia Connection
The Google order alone would be significant. But the second piece of news may matter more for Intel's long-term foundry valuation: Nvidia is running early trials on Intel's most advanced 18A process node for its next-generation Feynman GPU architecture.
Nvidia currently manufactures almost exclusively at TSMC. Any diversification of Nvidia's foundry supply chain toward Intel — even partial — would represent a seismic shift in the semiconductor industry's manufacturing landscape. Intel's 18A node is designed to compete directly with TSMC's N2 process, and having Nvidia as even a trial customer lends enormous credibility to the technology.
Wells Fargo raised its Intel price target on the news, citing improved foundry visibility. Morgan Stanley estimates the Google commitment could scale to 6 million or more units across 2027 and 2028, implying foundry revenue in the range of $8-12 billion from a single customer relationship.
179% and Counting
Intel's 2026 rally has been extraordinary. The stock traded below $40 at the start of the year, weighed down by years of manufacturing delays, market share losses to AMD, and skepticism that the foundry pivot would work. It hit $129.44 in May before pulling back with the broader market.
At $109.99, Intel trades at roughly 22 times forward earnings — elevated by Intel's historical standards but modest compared to foundry peers. TSMC trades at 28 times forward earnings. If Intel demonstrates consistent foundry execution through 2027, the valuation gap could narrow substantially.
The risk is execution. Intel has a long history of overpromising on process technology timelines. The 18A node is in risk production now, with high-volume manufacturing targeted for the first half of 2027. Any delay would undermine both the Google and Nvidia relationships and likely send the stock back toward $80.
What to Watch
The next catalyst is Intel's Investor Day on June 24, where management is expected to provide updated foundry customer metrics and 18A yield data. Traders should watch for any mention of additional customers beyond Google and Nvidia, as well as capex guidance that would indicate Intel is scaling foundry capacity to meet demand rather than running on existing infrastructure.
The stock faces resistance at the May high of $129.44. A break above that level would put the 2021 high of $138 in play. On the downside, the 50-day moving average near $98 has held through every pullback this year and represents the level where institutional buyers have consistently stepped in. The Intel foundry story is no longer speculative — it is contractual. The question now is scale.
