TLDR
- Intel stock surged 9% Thursday following reports that Apple is considering a potential investment after Nvidia pledged $5 billion last week
- Nvidia purchased $5 billion worth of Intel stock at $23.28 per share, a 25% discount to current trading prices
- The two companies plan to jointly develop data center and PC products, with Intel building x86 chips that integrate Nvidia GPU technology
- Wall Street analysts remain cautious about Intel’s long-term fundamentals despite recent momentum from political backing and partnerships
- Intel shares have gained roughly 70% this year but remain well below 2021 highs, with analyst price targets suggesting a potential 25% pullback
Intel stock jumped nearly 9% Thursday as rumors surfaced about Apple potentially making an investment in the chipmaker. This follows Nvidia’s $5 billion commitment announced last week.
The momentum represents a dramatic shift for Intel. Just weeks ago, few investors showed excitement about the struggling semiconductor company.
Nvidia announced it would purchase $5 billion worth of Intel stock at $23.28 per share. That price represents a 25% discount to Intel’s current trading levels.
The partnership goes beyond just the stock purchase. The two companies plan to jointly develop multiple generations of data center and personal computer products.
Intel will build x86 system-on-chips that integrate Nvidia RTX GPU chiplets. The companies will use Nvidia’s NVLink technology to connect their different architectures.
This arrangement essentially makes Intel one of Nvidia’s biggest customers. The deal combines Nvidia’s artificial intelligence expertise with Intel’s position in the PC market.
Political Backing Adds Momentum
President Trump’s recent endorsement has provided additional support for Intel shares. The Trump administration views Intel’s chip manufacturing business as crucial for national security.
The administration wants to expand domestic chip production in America. Intel’s foundry business sits at the center of this strategy.
Bernstein analysts noted they’ve been “terrified to short” Intel stock recently. They wrote that “Trump wants the stock to go up” may be a valid bull case for now.
Intel shares have gained roughly 70% this year. However, the stock remains well below its 2021 highs.
Reports suggest Apple could be Intel’s next major investor. Deepwater Asset Management’s Gene Munster told CNBC that an Apple investment might help curry favor with the Trump administration.
Wall Street Remains Cautious
Despite the recent rally, Wall Street analysts maintain cautious outlooks. Most firms rate Intel stock as a “hold” rather than a buy.
The consensus price target sits at $26, roughly 25% below Thursday’s closing price. This suggests analysts expect the stock to pull back from current levels.
Seaport Research Partners upgraded Intel to neutral from bearish this week. They expect more follow-on investments to drive the stock higher in the near term.
However, Seaport analysts said they remain “cautious on the company’s longer-term fundamentals.” They want to see actual improvements in Intel’s foundry business.
Nvidia’s $5 billion investment doesn’t include commitments to use Intel’s manufacturing services. A potential Apple deal might not include foundry commitments either.
Bernstein analysts emphasized that Intel needs customers more than money. If Intel can make chips that meet companies’ needs for scale, speed and cost, customers will line up to use them.
Government encouragement alone won’t solve Intel’s challenges. The company must prove it can deliver competitive manufacturing services.
The recent partnerships and political backing have created momentum for Intel stock. However, the company still faces fundamental business challenges that remain unresolved.
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