Intel (INTC) Stock Rises as Tesla Confirms 14A Chip Deal Before Earnings

TLDR

• Intel stock rose ~3.6% in extended trading after Tesla CEO Elon Musk confirmed plans to use Intel’s 14A chip process for the Terafab facility in Austin.
• Tesla becomes Intel’s first major external customer for the 14A manufacturing technology, a milestone Intel CEO Lip-Bu Tan called essential for the foundry business.
• Intel’s Q1 2026 earnings are expected to show adjusted EPS of just 2 cents, down from 13 cents a year ago, with revenue projected at $12.4 billion.
• The Intel foundry segment currently has no external customers and is expected to post a $2.4 billion operating loss in Q1.
• Intel stock hit a 52-week high of $70.33 last week and is up 235% over the past year.

Elon Musk dropped something of a bombshell on Wednesday. During Tesla’s earnings call, he confirmed that the EV maker plans to use Intel’s next-generation 14A chip manufacturing process for the Terafab complex, a sprawling AI and chip facility planned for Austin, Texas.

The news sent Intel stock up 3.6% in after-hours trading. By Thursday premarket, it was trading at $66.20, up about 1.4%.

Intel Corporation, INTC

It’s a deal Intel badly needed. CEO Lip-Bu Tan has been blunt: the foundry business cannot survive without outside customers. The 14A process is too expensive to develop on internal chip sales alone.

Terafab is Musk’s vision for a massive chip and AI campus shared by Tesla and SpaceX. It would eventually house two advanced factories — one for cars and humanoid robots, one for space-based data centers. Musk has said the site could one day produce one terawatt of annual computing capacity, compared with around half a terawatt currently generated across the entire United States.

Those numbers come with caveats. Analysts at Bernstein estimate building to that scale would cost between $5 trillion and $13 trillion. Key details — who pays for equipment, who runs the factory, when it opens — remain unclear.

Intel’s Numbers Tell a Different Story

While the partnership headlines are positive, the near-term financials at Intel are still rough. Wall Street expects Intel to report Q1 adjusted earnings per share of just 2 cents, down from 13 cents a year ago. Revenue is forecast to fall 2% year-over-year to $12.4 billion.

The foundry division, which is at the center of Intel’s strategy, currently has zero external customers and is expected to post a $2.4 billion operating loss in Q1. The PC chip business — which makes up around 57% of Intel’s first-quarter revenue — is being squeezed by a global memory shortage that is pushing up costs and dragging sales down roughly 7% year-over-year.

The AI data center story hasn’t helped Intel either. In a head-to-head revenue race with Nvidia, Intel held 71% of the data center chip market in 2021. By last year, that had fallen to just 7%.

What the Tesla Deal Actually Means

The 14A process isn’t expected to launch until 2028, which means near-term financial impact is limited. But the symbolic and strategic value is real. Tan had previously said Intel would exit the foundry business entirely if no outside customer could be signed.

Intel stock has already priced in a lot of optimism. It hit $70.33 last week — a new high — and now trades at 92 times its projected 12-month earnings. The S&P 500 trades at roughly 21 times.

Intel is scheduled to report first-quarter earnings Thursday afternoon.

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