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Key Takeaways
- Shares of Intel extended their rally Thursday following reports the company is soliciting an investment from Apple after winning a $5 billion pledge from Nvidia last week.
- Wall Street analysts said they see new developments bringing more gains in the near term, though they still have concerns about the company’s fundamentals.
Not long ago, it was hard to find people who were excited about Intel’s stock.
But these days, even skeptics are finding it difficult to look away, with President Donald Trump’s recent endorsement, a high-profile investment from Nvidia (NVDA), and rumors swirling about still more deals—leaving some investors wondering whether persistent concerns about the chipmaker’s business should be overlooked to get in on the action.
“We have been of the belief that Intel remains fundamentally challenged though have been terrified to short it,” Bernstein analysts wrote Thursday. “As much as we hate to admit it ‘Trump wants the stock to go up’ may in fact be a valid bull case for now (not one we are prepared to make but given everything that is happening we wouldn’t talk you out of it for now).”
Why This Matters for Intel Investors
Underpinning Intel’s turnaround story are expectations that it will gain more clients for its chip manufacturing business, which the Trump administration has called fundamental to expanding America’s domestic chip manufacturing and national security interests. Investors have pulled the shares higher lately, which some analysts suggest may be premature.
Intel’s (INTC) stock jumped nearly 9% Thursday to close around $34. A report that Apple (AAPL) could be the the struggling chipmaker’s next big investor has extended a torrid run over the past week since the struggling chipmaker announced Nvidia’s $5 billion pledge. The shares have added roughly 70% of their value this year, though they remain well off their 2021 highs.
Seaport Research Partners analysts, who upgraded the stock to neutral from a bearish rating this week, said they expect the trend could continue—at least in the near term. “The stock is likely to be driven by follow-on investments,” they wrote, though signs of improving fortunes at Intel’s foundry business are also vital. (Seaport said it remained “cautious on the company’s longer-term fundamentals.”)
Nvidia’s deal did not include commitments to using Intel’s foundry, and a potential deal with Apple might not either. In a Thursday interview with CNBC, Deepwater Asset Management co-founder Gene Munster suggested that an investment in Intel might be more useful to Apple as a tool for currying favor with the Trump administration.
Wall Street analysts tracked by Visible Alpha have overwhelmingly preferred to stick to the sidelines with “hold” ratings, with targets suggesting they see an eventual pullback in the stock. The Street’s current consensus target, at $26, is roughly 25% below Thursday’s close, a measure of caution even as the shares have climbed.
For some analysts, it’s less about momentum than what the latest news flow yields. If Intel can demonstrate a capacity to make parts that meet companies’ needs for scale, speed and cost, Bernstein said, “they will have customers lined up around the block to use them, and if they can’t no customer in their right mind would ever put any meaningful volume with them.”
And “encouragement” from the government, according to Bernstein, wouldn’t help. “More than money,” they wrote, “Intel needs customers.”
