Intel data center growth drives 2027 stock outlook

Intel stock has risen approximately 170% year-to-date as of October 14, 2026, significantly outpacing the S&P 500's gain. The primary driver for potential continued outperformance in 2027 is the company's data center business, which is seeing surging demand for server processors used in cloud computing and artificial intelligence services.

In the second quarter, Intel's data center and AI segment generated approximately $6.3 billion in revenue, marking a 59% year-over-year increase. This performance contributed to the company's strongest revenue growth in more than 15 years. The segment focuses on selling central processing units that power AI inference applications, including agents. Intel expects industry-wide server processor unit shipments to grow by strong double digits through 2027, with momentum continuing into 2028.

The company is also advancing its manufacturing capabilities. Intel recently launched its first server chip, the Xeon 6+, built on its new 18A manufacturing process. Production on the 18A node is currently running ahead of internal targets.

Despite the strong fundamentals, the stock trades at a premium valuation of about 47 times next year's earnings estimates. However, earnings are recovering from low levels and are projected to expand at an annualized rate of 69% over the next several years. This growth trajectory results in a price-to-earnings-growth ratio of 0.8, which is considered attractive relative to the expected expansion.

Investors will receive further data when Intel reports its third-quarter results on October 29. If the data center business maintains its current growth pace, the stock is positioned to outperform in 2027.