By Max A. Cherney

May 13 (Reuters) - Intel’s stock chart following chief executive Lip-Bu Tan’s takeover last year is the stuff of investors’ dreams - almost a five bagger as of Tuesday’s close.

But is it too early to call it a comeback? While impressive, the stock run is not entirely of Intel’s making. Institutional money has had no choice but to get involved in the name or risk weak returns compared to index benchmarks like the S&P 500, according to three chip analysts.

Intel INTC.O is also far from a steady state. The company recorded a net loss of $3.73 billion less than a month ago. To execute its plans to become a world-class contract chipmaker, Intel will have to spend tens of billions of dollars developing the tech.

There is no denying that Tan has made progress. He took Intel off financial life-support by securing billions of dollars of investments from Donald Trump’s administration, Nvidia and SoftBank.

But despite Intel’s muscular stock run-up - along with much of the chip sector - tough questions remain about the company’s ability to follow through on Tan’s plans to revive the American icon and grow into its valuation.

Read on for more details about the crucial questions that surround the still-struggling company and one thing Intel could do to save itself.

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REVIVING INTEL

The chip industry has a big problem at the moment. The world’s leading foundry, Taiwan’s TSMC, has effectively no more wafers it can sell to make more artificial intelligence chips on its three nanometer technology. Nvidia, AMD, and Broadcom - which helps Google and others design in-house AI processors - have dried up capacity.

“TSMC is the real bottleneck,” Semianalysis President Doug O’Loughlin told me in an interview.

That’s why anyone interested in having a shot at producing a new piece of silicon is casting around for alternatives. Samsung and Intel are both in the “danger zone.”

The tentative agreement between Apple and Intel for chip manufacturing, first reported by the Wall Street Journal, confirmed what the industry had awaited for months.

A deal between the two companies sounds good on paper, but to understand what it means for Intel, investors need to know three key things: What chip? What manufacturing technology will it involve? How much volume will it drive? None of that is clear at the moment.

Even with Apple as a customer, the company has failed to keep up with Moore’s law - the prediction that chips will get faster and cheaper every two years.

“No company in history has ever fallen off the Moore’s law curve and made it back on,” Seaport Research analyst Jay Goldberg said.

Early signs are positive - the Lunar Lake laptop chip Intel has made with its current 18A chip production process is a good start, and suggests the process will be viable for external use.

But it will take at least another year to 18 months to determine whether Intel has made progress and a minimum of five years to determine whether the foundry business will turn into a functioning and profitable part of the company’s operations, according to J.P. Morgan analyst Harlan Sur.

Intel’s central processing unit business has poured cash into the company in the last two quarters due to an AI-related surge in demand. Despite the fact that its designs are still at least a year or two behind AMD, finance chief Dave Zinsner said on the company’s last earnings call that CPU demand was so strong Intel was selling deficient chips nobody previously wanted.

On the bright side, Intel could take advantage of the massive share appreciation by raising cash - $5 billion or $10 billion would go a long way, the analysts said - through an equity sale to shore up its balance sheet.