Intel's Data Center Surge: A 2027 Growth Engine?

Intel's data center business is showing robust growth, potentially positioning it for a successful 2027. The company's server processors, crucial for cloud computing and AI, saw revenue increase by 59% year over year in the second quarter, marking its strongest revenue growth in over 15 years.

Demand for AI inference applications is expected to boost server CPU shipments, with Intel anticipating industry-wide growth in the strong double digits through 2027, with momentum extending into 2028. Intel has also introduced its Xeon 6+ server chip, manufactured using its new 18A process, which is performing ahead of schedule.

Despite a high stock valuation, Intel's earnings are recovering, and projected growth rates suggest an attractive valuation relative to its expected expansion. Investors will receive further insights when Intel reports its third-quarter earnings on October 29. The company's performance in the data center sector is key to its stock's potential outperformance in the coming years.