Intel's $31b share rally sends valuation to dot.com-era levels

After months of turbulence, Intel bulls are finally being rewarded for their patience.

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CHICAGO -

But the stock's sudden rebound comes with a worrying side effect: a valuation so high that its most recent precedent is from the dot.com era more than two decades ago.

Shares of the struggling chip-maker have rallied 28 percent in August, adding about US$24 billion (S$31 billion) in market value, on reports that the US government is in talks for a potential equity stake, as well as plans for a US$2 billion investment from Japan's SoftBank Group.

The jump has Intel trading at 53 times profits projected over the next 12 months, the highest since early 2002, according to data compiled by Bloomberg.

"The stock looks incredibly expensive here," said Mr. Wayne Kaufman, chief market analyst at Phoenix Financial Services.

"That kind of multiple is a bet that the government will push Intel so hard on customers that it becomes a winner."