Intel's stock just had its most explosive growth ever. Why skeptics are piling on.

By Christine Ji

Following the stock's record 174% rise, which surpasses dot-com bubble records, some are questioning whether Intel is flying too close to the sun

Intel is the top-performing name in the PHLX Semiconductor Index this year.

In a matter of months, Intel has transformed itself from a struggling foundry to a cornerstone of the artificial-intelligence buildout, sending the stock rallying to all-time highs.

But a more cautionary story is beginning to emerge as investors wonder if the momentum is sustainable.

Intel (INTC) has led an aggressive rally in semiconductor stocks this year, soaring 206% year to date, and is the top-performing stock in the PHLX Semiconductor Index SOX. Shares have surged 13% week to date through morning trading on Thursday, on news of potential chip deals with Apple (AAPL) and Samsung (KR:005930).

Earlier this week, the PHLX Semiconductor Index notched its strongest 25-day rolling performance since March 2000 - right before the dot-com bubble burst. Intel has already blown past its own dot-com records on that basis.

Veteran options trader Imran Lakha pointed out in an X post that Intel's rally this time around is occurring at a much higher velocity. What Intel shares have achieved in the past five weeks took more than a year during the height of the dot-com boom.

In the last 26 trading sessions, Intel shares have rallied 174% from their recent low, delivering gains not seen even during the 2000 internet boom. During the dot-com bubble, the highest 26-day gain Intel ever saw was approximately 46% in late 2001, according to Dow Jones Market Data, when it was recovering off its bubble-bursting lows.

Read: The last time semiconductor stocks rose this far this quickly, the dot-com bubble burst

The enthusiasm has turned frothy, according to Matthew Unterman, managing director at S3 Partners. Accompanying Intel's stock surge is an increase in short interest and positioning headwinds, according to a recent analysis by S3.

Intel's short interest has reached a 52-week high at 3.5% of total float, "with an acceleration of shorts building in March and April," Unterman wrote in a Wednesday note. S3's active long-to-short ratio - calculated by dividing the dollar value of shares held by active managers by the total value of shares being shorted - has fallen to roughly 4x from over 7x last August.

That means short interest is growing faster than active long interest, "reflecting a sustained deterioration in positioning balance," Unterman wrote.

Intel shares have a relative strength index reading of roughly 86 in recent trading, according to FactSet. The RSI is a technical momentum indicator that gauges the speed and magnitude of a stock's recent price changes on a scale of 0 to 100. A score above 70 typically indicates an overbought stock, and Underman called Intel "firmly overbought."

The last time Intel's RSI closed above 85 before the current rally was on Nov. 2, 2017, and the stock then fell more than 8% over the next five weeks.

Additionally, Intel shares are trading at the top of the range defined by Bollinger bands, another technical analysis tool. Bollinger bands consist of three lines: the middle band tracks a stock's 20-day simple average, and the upper and lower bands are set two standard deviations away from the middle.

Shares of Intel, which closed at $113.01 on Wednesday, have been riding the upper Bollinger band since the beginning of April.

The price action has been a statistical anomaly and could signal a potential snap back to the 20-day average. "The recent price breakout has left an unfilled gap between the $70-$80 range, which aligns with the middle grey Bollinger Band," Unterman wrote.

That range is roughly 40% to 30% below current prices.

Unterman believes that price gap "provides a logical mean reversion zone on any momentum stall."

See more: Intel is now worth more than Oracle as its stock explodes higher

-Christine Ji

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05-07-26 1038ET