Intel’s US$440 billion six-week surge has short sellers circling

[NEW YORK] A scorching rally in Intel shares is threatening huge losses for traders wagering that they are due to fall. But that is not stopping them from placing those bets.

Since hitting a low on Mar 30, the chipmaker’s stock price has soared 214 per cent, adding more than US$440 billion to its market capitalisation and pushing short-sellers’ paper losses above US$12 billion, based on data from data analytics company S3 Partners.

At the same time, short interest in Intel shares as a percentage of the company’s float, a measure of how many shares have been borrowed to bet against the stock, is near a 52-week high. 

“Intel’s almost like a poster child for the momentum trade right now,” said Matthew Unterman, managing director at S3 Partners. “At some point, the momentum’s going to stall.”

Betting against Intel right now comes with considerable risk, however. The stock soared 25 per cent last week, its best showing since January 2000, and kept climbing on Monday (May 11) to reach yet another record high. 

This latest move is being powered by a report that the company reached a preliminary chip-making agreement with Apple. But since the start of April, Intel is the top performer in the S&P 500 Index, beating high-flying Sandisk.

“It just isn’t realistic to try and pick a top in a momentum stock. There’s no ability to control your risk,” said Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF, which shorts stocks.

“The short sellers who fight price action give up a lot of alpha, and it doesn’t make for a smooth portfolio in the interim.”

Shorts are looking at other chip stocks as well, as the group continues to power higher in 2026.

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Micron Technology and Advanced Micro Devices, the second and third-best performers in the Philadelphia Stock Exchange Semiconductor Index since late March, have also seen upticks in short interest, S3 data show.

The chipmaker index is up almost 60 per cent since the start of April, and its 14-day relative strength index recently hit its highest since 2011, a sign that the group as a whole is heavily overbought. 

But even though the rally looks stretched, the unpredictability of momentum has some investors hesitant to test it.

“I would not short any of these stocks. This is not a sector where glory can be found for a short seller,” said Thomas George, a portfolio manager at Grizzle Investment Management, which owns Intel shares. 

Of course, there is an argument that Intel’s gains are not just about momentum. The US government took an ownership stake in the company last summer, and artificial intelligence chip giant Nvidia followed that with a US$5 billion investment in September.

The shares popped in March when the company announced that its new Xeon chip is being used in one of Nvidia’s systems. And just a few weeks ago, management gave a sales forecast that blew away Wall Street’s expectations.

All of which is leading Wall Street to raise its earnings projections. Analyst estimates for Intel’s 2026 adjusted earnings per share have more than doubled in just the last month, based on data compiled by Bloomberg.

But, that has not dented Intel’s sky high market valuation. It is among the 10 most expensive stocks in the S&P 500 and the priciest chip stock in the market.

The company’s shares trade at more than 100 times earnings expected over the next 12 months, their highest multiple and roughly five times their 10-year average. By comparison, Nvidia trades at about 24 times forward earnings.

“That expensive multiple could get cheap quickly if we see growth pick up,” George said. “If AI leads to more efficiency, more people will use it, which means more demand.”

Even with the growing optimism about Intel’s outlook, Wall Street is hardly bullish on the stock. The average analyst price target of about US$85 implies a 34 per cent decline from Monday’s closing price.

That is the weakest implied return among all members of the semiconductor index. Of the 53 analysts tracked by Bloomberg who cover the stock, 17 have “buy” ratings and three have “sell” ratings. 

In the coming 12 months, there is a decent chance that some high-momentum stocks such as Intel will experience significant sell-offs, potentially as severe as 30 percent, George said.

However, the momentum in the stock and the improvement in the company’s fundamentals make trying to time any reverse perilous.

“Companies view AI as existential, so they’re not going to stop investing in it, building it out,” he said. “You can’t stand in front of that as a short seller.” BLOOMBERG