Intel's 214% Surge in 6 Weeks Costs Short Sellers $12 Billion as They Hold On

Intel is staging an extreme market where both bulls and bears find it hard to dismount.

Since its low point on March 30th, Intel's stock price has surged by 214%, with a market capitalization increase of over $440 billion. Last week, it saw a single-week increase of 25%, marking the best weekly performance since January 2000, and on Monday, it continued to climb to a new historical high.

However, short sellers, with paper losses exceeding $12 billion, have not yet retreated, maintaining positions near a one-year high. At the same time, the average target price given by 53 Wall Street analysts is around $85, implying about a 34% downside from the current stock price, making it the stock with the weakest expected return among the constituents of the Philadelphia Semiconductor Index.

In other words: Bears are holding on despite huge losses, analysts are collectively bearish, but the stock price is still hitting record highs.

Catalysts stack up, with fundamentals genuinely improving

This rally is not purely driven by sentiment. The US government took a stake in Intel last summer, followed by Nvidia's $5 billion investment in September; in March this year, Intel announced that its new Xeon chips were used in some of Nvidia's systems; a few weeks ago, the sales forecast released by the management significantly exceeded Wall Street expectations; the latest catalyst was the report of Intel reaching a preliminary agreement with Apple on chip manufacturing. Analysts' expectations for its 2026 adjusted EPS have more than doubled in the past month, and Intel has thus become the strongest performer in the S&P 500 over the same period, with gains even surpassing the strong performer SanDisk.

Valuation has reached an extreme, with a historical high of 100 times P/E ratio

The improvement in fundamentals has not relieved valuation pressure. Intel's forward P/E ratio for the next 12 months exceeds 100 times, a historical high, about five times its 10-year average, far higher than Nvidia's forward P/E ratio of about 24 times, making it one of the ten most valued stocks in the S&P 500.

Thomas George, portfolio manager at Grizzle Investment Management and holder of Intel stocks, said: "If growth accelerates, this high valuation multiple could quickly become reasonable." However, he also estimated that the probability of a 30% pullback over the next 12 months is not low, it's just that timing is extremely difficult.

Bears are holding on, but the cost of going against the trend is extremely high

Data from S3 Partners shows that Intel's short positions represent almost a 52-week high proportion of the floating shares. Matthew Unterman, Managing Director of S3 Partners, said: "Intel is now almost a benchmark for momentum trading. Momentum will eventually stall at some point."

But the cost of going against the trend in short selling is also real. Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF, warned: "It is simply unrealistic to try to judge the top in momentum stocks, and bears who fight against the price trend will lose a lot of excess returns."

Short selling sentiment has spread to the entire chip sector. Micron and AMD's short positions have also risen, and the Philadelphia Semiconductor Index has累计上涨nearly 60% since early April, the 14-day relative strength index has recently touched its highest level since 2011, and the entire sector is seriously overbought.

"Enterprises view AI as a life-or-death strategy, and will not stop investing and building," said George. "As a bear, you can't stand in the way of this force."

Both bulls and bears are aware of the risks involved, yet they find it difficult to exit - this may be the most accurate portrayal of Intel's current market sentiment.