TLDR
- Intel stock initially rose on reports that the Trump administration is encouraging Taiwan Semiconductor Manufacturing (TSM) to acquire or partner with Intel’s chip fabrication unit.
- The stock later fell 1% amid a broader tech sector selloff, with the S&P 500 down 1.3% and Nasdaq down 2.3%.
- Analyst Amanda Tan maintained a Hold rating on Intel with a $22 price target, citing mixed factors despite earnings exceeding expectations.
- Intel faces significant challenges in the AI space, trailing behind Nvidia and AMD, with its Gaudi AI accelerators struggling to gain traction.
- The company continues to deal with high operating costs and significant losses in its Foundry division, putting pressure on margins.
Intel Corporation’s stock experienced a roller coaster trading day on Thursday, initially climbing as much as 3.7% before falling back to close down 1% amid broader market declines. The volatility came as reports surfaced about potential changes for the company’s struggling chip fabrication business.
The early gains came after news broke that the Trump administration is actively encouraging Taiwan Semiconductor Manufacturing Company (TSM) to consider acquiring or partnering with Intel’s foundry business. TSMC, widely recognized as the world’s leading manufacturer of high-performance semiconductors, has been identified as a potential rescue for Intel’s troubled manufacturing division.
Intel’s chip fabrication unit has become a significant drag on the company’s performance in recent quarters. The division has accumulated substantial losses while simultaneously missing key technological milestones that have put Intel behind its competitors.
Despite these struggles, the foundry business remains strategically important to the United States as a domestic semiconductor manufacturing resource. This national security angle appears to be driving the administration’s interest in preserving and strengthening the operation through a potential TSMC deal.
Investor optimism about this possible arrangement initially drove the stock higher as shareholders anticipated that a deal could unlock value and relieve Intel of a money-losing operation. However, the gains proved short-lived.
The positive sentiment was overtaken later in the day as broader market conditions deteriorated. The downturn was triggered in part by reaction to Nvidia’s earnings report released the previous evening.
Nvidia posted strong results that exceeded expectations
Nvidia actually posted strong results that exceeded analyst expectations, reporting earnings per share of $0.89 on revenue of $39.33 billion. The company also provided guidance for $43 billion in sales for the current quarter, above consensus estimates of $41.78 billion.
Despite these strong numbers, investors appeared concerned about Nvidia’s valuation levels. This triggered a wave of selling that spread throughout the technology sector, ultimately pulling Intel down with it.
The market’s reaction reflects the challenging environment Intel continues to navigate. The company has been working to implement its “IDM 2.0” strategy aimed at reclaiming its technological edge in the semiconductor industry.
However, Intel faces substantial headwinds in the rapidly expanding artificial intelligence market. The company trails both Nvidia and AMD in this crucial growth sector.
Intel’s Gaudi AI accelerators have struggled to gain meaningful market traction. Adding to the company’s challenges, its anticipated Falcon Shores GPU has faced delays, further hampering its competitive position in AI computing.
Analyst maintained a Hold rating on Intel stock with a $22 price target
Analyst Amanda Tan from DBS recently maintained a Hold rating on Intel stock with a $22 price target. Her assessment acknowledged that recent earnings had exceeded expectations but pointed to lingering uncertainties for the first quarter of 2025.
Tan cited several factors contributing to the cautious outlook, including seasonal trends, inventory adjustments, tariff impacts, and competitive pressures. These elements combine to create a challenging forecast for Intel’s near-term performance.
The company’s ongoing struggles with high operating costs continue to weigh on its financial results. The Foundry division, in particular, has generated substantial losses that have put pressure on overall company margins.
Intel currently holds the interest of 83 hedge fund holders, according to recent data. This positions the company as the second-ranked AI stock making waves on Wall Street based on hedge fund sentiment.
While some investors see potential in Intel’s future, others remain concerned about its ability to compete effectively in the AI space against more established players. The company’s stock has reflected this uncertainty with its volatile performance.
The possible deal with TSMC represents a potential turning point for Intel’s manufacturing capabilities. However, much remains uncertain about whether such an arrangement will materialize and what form it might take.
As Intel navigates these challenges, investors continue to closely monitor developments in both its core business and its efforts to gain ground in artificial intelligence computing. The stock’s recent trading pattern illustrates the market’s mixed assessment of the company’s prospects.
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