Friday Sep 20 2024 06:47
3 min
Intel stock gained on Tuesday following the troubled chipmaker's announcement of funding from the U.S. government and a partnership with Amazon Web Services. The company also revealed plans to strengthen its operations by creating an independent subsidiary for its foundry business.
Today in the stock market, Intel shares rose 2.7%, closing at $21.47. This follows a significant 6.4% jump on Monday, where the stock closed at $20.91.
According to Jordan Klein, a trading-desk analyst at Mizuho Securities, the latest news has shifted Intel from “life support to critical condition.” He noted in a client update that “if there was ever a company in need of positive news, it was Intel,” especially considering its shares have plummeted 60% year-to-date, in stark contrast to the semiconductor sector, which has risen 34% this year.
While Deutsche Bank analyst Ross Seymore acknowledged that Intel's transformation efforts are progressing positively, he cautioned that the associated costs will impact the company's financials for at least the next year. He rates Intel as a hold, with a price target of $27.
BofA Securities analyst Vivek Arya expressed that Intel’s operational update “raises more questions than answers,” maintaining an underperform rating on the stock with a price target of $21.
Shares of Intel (INTC) advanced Monday, aided by a report that the semiconductor maker received a multibillion-dollar award from the Pentagon to make chips for the U.S. military.
Bloomberg reported late Friday that Intel qualified for $3.5 billion in federal grants as part of the Secure Enclave program, which is designed to produce advanced chips for military and intelligence applications. According to people familiar with the matter, the announcement of the funding could come as early as this week.
According to Bloomberg, the new contract adds to the potential $8.5 billion in grants and $11 billion in loans Intel received in March under the CHIPS and Science Act of 2022, which aims to revitalize U.S. semiconductor manufacturing and reduce dependence on Asia. Intel did not respond immediately to Investopedia’s request for comment on Monday.
The company has faced challenges recently, as competitors producing artificial intelligence (AI) chips have gained market share. Intel has reported larger-than-expected losses, cut jobs, and seen its stock price decline significantly.
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