Intel has entered Elon Musk's ambitious Terafab AI chip production project, partnering alongside Tesla, SpaceX, and xAI, according to Investing.com. This development marks a significant validation for Intel's foundry business, positioning the semiconductor leader at the heart of cutting-edge AI infrastructure efforts.

The company, which designs and manufactures computer products including central processing units and AI-related accelerators, has seen its shares climb more than 220% since August last year. Shares added nearly 20% following the Terafab announcement this week and 50% since late March, approaching a five-year high.

Intel's involvement in Terafab underscores growing confidence in its Intel Foundry Services unit. Previously viewed as a risky turnaround play, the foundry now attracts major AI players, helping shift perceptions from laggard to key supplier in the AI ecosystem. Investing.com highlights this narrative change as central to the stock's re-rating, even as operational improvements remain nascent.

At $41.19 per share, Intel trades below the $61.50 analyst consensus target price, implying potential upside of around 49%. The Hold consensus rating reflects mixed views, with KeyCorp reiterating a Buy at $70 while firms like Cantor Fitzgerald and Wells Fargo favor Hold ratings amid execution uncertainties.

Investors await Intel's earnings on April 23 for signs that the momentum translates into results. Progress in foundry economics and Terafab contributions could extend the rally, though bears caution that the sharp price gains have outpaced fundamentals, leaving room for volatility if expectations falter.

Tesla shares, at $355.28, carry an Outperform consensus but trade above the $325 average target. The partnership ties into Musk's broader AI ambitions across his ventures.