By Samrhitha A

Intel rose nearly 8% on Friday and sparked a jump in chip stocks after its upbeat forecast signaled that the personal computer market was rebounding from its quarters-long slump.

The chipmaker was set to increase its market value by nearly $11 billion. Other chip firms such as Advanced Micro Devices, Nvidia and Arm rose 1.6% to 2.2%.

"(Intel) does appear to have turned the corner on the worst of it", Bernstein analysts said, pointing to the improvements in the PC-focused business and customers it had signed for its chip contract manufacturing business, among others.

Intel forecast fourth-quarter revenue and margins above Wall Street estimates on Thursday, after it reported a smaller-than-feared decline in the segment that houses its PC business for the July-September period.

Under CEO Pat Gelsinger, Intel is trying to turn around its business by making heavy infrastructure investments that the company hopes will give it an edge in chipmaking and allow it to compete with the likes of Taiwan's TSMC for foundry clients.

After securing three unnamed clients for the contract manufacturing unit, Gelsinger told Reuters on Thursday that he expects to close a deal for a fourth customer before the end of the year.

"The foundry business is slowing taking shape.  The announcement of new customers is a clear positive that shows there is customer interest in what Intel brings to the table," Logan Purk, analyst at Edward Jones, said.

At least 17 analysts raised their price targets on the stock, boosting the median view to $37, according to LSEG data. Intel has rallied 23% this year, but its gains have paled in comparison to the 44.6% jump at AMD and nearly three-fold rise at Nvidia.

Intel trades at 22.2 times its 12-month forward earnings estimates, compared with Nvidia's 26.06.

Bernstein analyst Stacy Rasgon said Intel's "AI story still seems marginal" and the "datacenter performance continues to suffer from significant headwinds".

The company is under heavy pressure in the data center chip market from Nvidia, whose graphic processing units are used for training artificial intelligence models.

Sales at Intel's data center business, which also houses its AI chip division, dropped 10%. But the company has seen interest surge for its "Gaudi" AI chips.

"There's a lot of interest in that. We're now supply constrained on Gaudi and racing to catch up to that," Gelsinger said.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Shounak Dasgupta)