Intel surged 214% in six weeks, short sellers lost over $10 billion but remain "stubborn," Wall Street warns of a 34% correction potential.

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Intel's stock price has soared more than twofold since the end of March, creating a market miracle while pushing short sellers into massive losses — but this hasn't stopped them from continuing to bet on a price reversal.

According to S3 Partners data, Intel's stock has risen 214% from its March 30 low, increasing its market value by over $440 billion, with short sellers losing more than $12 billion on paper. Nevertheless, Intel's short interest as a percentage of its outstanding shares remains near a 52-week high. Last week, Intel's stock surged 25%, marking its best weekly performance since January 2000, and continued climbing to record new highs on Monday.

The latest catalyst for this rally is reports that Intel has reached a preliminary chip foundry agreement with Apple. Since early April, Intel has become the best-performing stock in the S&P 500, with gains even exceeding Sandisk Corp., another strong stock during the same period. Meanwhile, analysts’ forecasts for Intel's adjusted earnings per share for 2026 have more than doubled over the past month.

Shorts Add to Positions Against Momentum, Gambing on a Peak

Despite mounting losses, short sellers have not retreated. S3 Partners data shows that Intel’s short interest remains near a one-year high.

Matthew Unterman, managing director at S3 Partners, said, "Intel has now become a benchmark for momentum trading. Momentum will inevitably stall at some point."

However, betting against momentum is extremely costly. Brad Lamensdorf, co-portfolio manager of the AdvisorShares Ranger Equity Bear ETF, warned: "Trying to call the top in momentum stocks is simply unrealistic; you can't control the risk. Shorts fighting price trends will lose massive excess returns and find it difficult to maintain a stable portfolio in the short term."

Bearish sentiment has also spread to other chip stocks. According to S3, short positions have also increased in Micron Technology and AMD, the second- and third-best performers in the Philadelphia Semiconductor Index since the end of March. The index itself has risen nearly 60% since early April, and its 14-day relative strength index recently hit its highest level since 2011, indicating the sector is severely overbought.

Fundamentals Improve, but Valuations Reach Extremes

Intel's surge this round is not purely momentum-driven; its fundamentals have also seen real improvement. Last summer, the U.S. government took a stake in Intel, and AI chip giant Nvidia followed up in September with a $5 billion investment. In March this year, Intel announced its new Xeon chips would be used in a Nvidia system, sparking a jump in the share price. A few weeks ago, management issued a sales forecast that far exceeded Wall Street expectations, further boosting market confidence.

Nevertheless, fundamental improvements have not alleviated valuation pressure. Intel is currently one of the top ten most expensive stocks in the S&P 500 and the priciest chip stock in the market. Its forward 12-month P/E ratio exceeds 100 times, not only the highest in history but also about five times its 10-year average. In contrast, Nvidia's forward P/E is about 24.

Thomas George, portfolio manager at Grizzle Investment Management, who holds Intel shares, said, "If growth accelerates, this expensive valuation could quickly become reasonable. If AI brings greater efficiency, user demand will increase as well."

Wall Street Price Targets Point to Significant Downside

Despite the market's bullish sentiment, Wall Street on the whole remains unenthusiastic about Intel shares.

According to Bloomberg data, only 17 of 53 analysts tracking Intel have issued buy ratings, with 3 issuing sell ratings. The average price target is about $85, implying a 34% downside from Monday's close, making it the weakest expected return among Philadelphia Semiconductor Index components.

George believes that in the next 12 months, high-momentum stocks like Intel have a good chance of seeing major corrections, with drops possibly reaching 30%. But he also notes that it is extremely difficult to time such corrections due to the dual support from momentum and fundamentals.

"Companies see AI as a matter of life and death and will not stop investing and building," he said. "As a short, you can't stand in front of this force."

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