Intel Traders Defy Market Recovery with Persistent Shorting Activity

Intel Shares Soar Amid Short-Seller Woes

A remarkable rally in Intel Corp. shares has left traders who bet against the company facing significant losses. Since hitting a low on March 30, the chipmaker's stock price has surged 214%, adding more than $440 billion to its market capitalization. According to data from S3 Partners, short-sellers are now facing paper losses of over $12 billion.

This unprecedented rise has pushed short interest in Intel shares as a percentage of the company's float to near a 52-week high. The stock has been fueled by a report that Intel reached a preliminary chip-making agreement with Apple Inc. Intel's latest move is also being driven by a sales forecast that exceeded Wall Street's expectations.

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Note: Data from S3 Partners.

Intel's meteoric rise has also seen it become the top performer in the S&P 500 Index since the start of April, outpacing even high-flying Sandisk Corp. The chipmaker index as a whole is up almost 60% since the start of April, with its 14-day relative strength index recently hitting its highest since 2011.

Investors are hesitant to test the rally, citing the unpredictability of momentum. Portfolio manager Thomas George at Grizzle Investment Management, which owns Intel shares, said, "I would not short any of these stocks. This is not a sector where glory can be found for a short seller."

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Despite its sky-high market valuation, Intel's market capitalization is still being raised by Wall Street. Analyst estimates for Intel's 2026 adjusted earnings per share have more than doubled in just the last month, according to data compiled by Bloomberg. The shares trade at more than 100 times earnings expected over the next 12 months, their highest multiple ever and roughly five times their 10-year average.

However, this expensive multiple could quickly become cheap if growth picks up, according to George. "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 $85 implies a 34% decline from Monday's closing price. This is the weakest implied return among all members of the semiconductor index. Of the 53 analysts tracked by Bloomberg who cover the stock, just 17 have buy ratings and three have sells.

In the coming 12 months, there's a decent chance that some high-momentum stocks like Intel will experience significant selloffs, potentially as severe as 30%, George said. However, the momentum in the stock and the improvement in the company's fundamentals make trying to time any reverse perilous.