What Happened?
Shares of computer processor maker Intel (NASDAQ: INTC) jumped 6% in the afternoon session after the stock continued a multi-day rally amid reports that the U.S. administration was considering new measures to boost domestic chip production, alongside news of the company seeking strategic investments.
The potential government policy would require chipmakers to expand their U.S. production, possibly facing tariffs if they imported more chips than they made domestically. Such a move would benefit companies like Intel with a significant manufacturing presence in the U.S.
Adding to the positive sentiment, the company reportedly approached both Apple and Taiwan Semiconductor Manufacturing Company (TSMC) about potential investments or partnerships. These discussions followed recent multibillion-dollar investments from Nvidia and a 10% stake taken by the U.S. government, fueling optimism about the chipmaker's turnaround efforts. The session's gains extended a recent surge for the stock, which had risen more than 20% over several trading days on the news of potential outside investments.
After the initial pop the shares cooled down to $35.63, up 4.9% from previous close.
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What Is The Market Telling Us
Intel’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 6.3% as reports surfaced that the company was pursuing an investment from Apple and it received a stock upgrade from Seaport Research.
The move continued a rally from the previous trading session, which was initially sparked by a Bloomberg report about the early-stage discussions between the two tech giants. Following these developments, Seaport Research analyst Jay Goldberg upgraded Intel's stock to 'Neutral' from 'Sell.' While the analyst's note expressed caution that Intel was “on the wrong path with a shrinking window," it also stated the stock would likely be driven by follow-on investments in the near term.
This potential investment from Apple followed a series of other capital infusions, including a reported $5 billion from Nvidia and $2 billion from SoftBank, as part of Intel's efforts to bolster its business.
Intel is up 76.2% since the beginning of the year, and at $35.63 per share, has set a new 52-week high. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $692.72.
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