Intel's Stock Surges on AWS Deal and Government Chip Grant

Intel Teams Up With Amazon. Is the Chip Stock a Buy Now? | The Motley Fool

After hanging on the ropes for much of August and September, Intel (INTC 3.64%) is suddenly having a banner week. The stock jumped yesterday after the company secured $3 billion in funding from the CHIPS Act, and today it's climbing again after it announced a new partnership with Amazon (AMZN 0.96%). At 12:23 p.m. ET, the stock was up 4.4% on the news. Investors see it as a sign that the company is reinventing itself after announcing a massive restructuring in its second-quarter earnings report. After the market closed yesterday, Intel said it was expanding its strategic collaboration with Amazon Web Services, announcing a multiyear, multibillion-dollar partnership for Intel to produce custom chips for Amazon, including an artificial intelligence (AI) fabric chip and a Xeon 6 chip designed to handle computing-intensive AI workloads. The news gives Intel's foundry business a much-needed win. It's been losing billions of dollars a year and has fallen behind rivals like Taiwan Semiconductor. The AI fabric chip will use Intel's 18A process, which makes nodes as small as 18 angstroms (1.8 nanometers). Coming directly on the heels of the CHIPS news, the expanded partnership with Amazon is another significant win for Intel Foundry. However, investors shouldn't get carried with Intel's rally. The company still needs to execute and do so in a timely, cost-efficient manner, which has been a problem for it in the past. Intel certainly isn't going away, and a vast ecosystem depends on and supports its chip design and foundry businesses, but a turnaround will take a lot more than back-to-back favorable announcements. Keep your eye on its next earnings report, due out around the end of October. While the numbers will likely be ugly, the company could give some insights into the progress it's making in revamping the business.

CEO Pat Gelsinger's turnaround effort just got a massive boost.

Intel shares powered higher in early Tuesday trading after the chipmaker unveiled some major changes to its flagging business model as well as details of a lucrative new contract with Amazon. Intel (INTC) , which has struggled to align some of its legacy business units with its new focus on high-end chipmaking, has lost billions in value so far this year and had its status in the Dow Jones Industrial Average questioned amid the ongoing slump. The group is aiming to scale its business across the AI spectrum by making chips that power next-generation laptops as well as those that support processors for client-based servers. It's also building and expanding a contract chip-foundry business tied to investments from President Joe Biden's Chips Act legislation under the leadership of CEO Pat Gelsinger. That portion of the business, which has been seen as a drag on Intel's broader advance, is now likely to be carved out as an independent subsidiary, Gelsinger said, with an independent board, following a meeting planned after the group's weaker-than-expected second quarter earnings. Major Amazon deal It's value was also enhanced late Monday by a deal with Amazon Web Services (AMZN) to make high-end chips, as well as plans to pause the construction of a massive $32 billion foundry site in Germany for at least two years. "This expansion of our longtime relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for customer workloads," Gelsinger said of the "multiyear, multibillion-dollar" deal. "Intel's chip design and manufacturing capabilities, combined with the comprehensive and broadly adopted cloud, AI and machine learning services of AWS, will unleash innovation across our shared ecosystem and support the growth of both businesses, as well as a sustainable domestic AI supply chain," he added. Related: Intel stock tumbles as Dow status questioned amid turnaround slump The group also confirmed reports of a $3 billion contract from the CHIPS and Science Act to develop highly-sensitive components for the Department of Defense and said plans to sell its a portion of its Altera chip business, which it purchased for $16.7 billion in 2015, are still on track. The cost-cutting tied to its plans to delay construction in Germany, as well as the infusions from the DoD and Amazon contracts, could give Intel more room to devote capital to its foundry business once its independent status is established. Foundry growth engine CFRA senior equity analyst Angelo Zino, in fact, thinks the foundry unit could be Intel's "only real potential growth engine". "Intel's core business is being attacked on many fronts by chipmakers (such as Nvidia, AMD and Qualcomm) in the PC and data center markets while hyperscalers look to replace its (processors) with internally designed chips," Zino said in a recent client note. Related: Analyst says Intel should drop a key business to survive "Even if Intel rolls out its own accelerators in 2025, we expect it to dramatically lag peers," he added. The group's second quarter earnings reflected that assessment, as adjusted profit for the three months ending in June came in at 2 cents a share, well shy of Wall Street's 10-cent forecast, and revenues fell 1.15% to $12.8 billion. More Tech Stocks: Looking into the current quarter, Intel sees muted revenues in the region of $12.5 billion to $13.5 billion while unveiling plans to reduce its global headcount by 15% -- more than 15,000 people -- and suspend its quarterly dividend. Intel shares were marked 6.8% higher in premarket trading to indicate an opening bell price of $22.34 each, a move that would still leave the stock down nearly 50% for the year. Related: Veteran fund manager sees world of pain coming for stocks

What's Going On With Intel Stock On Tuesday? - Intel (NASDAQ:INTC)

Intel plans to spin off its foundry business, explore divestment of Altera, and focus on AI chip production for Amazon Web Services. Intel Corp INTC stock maintained upward momentum on Tuesday, a day after CEO Pat Gelsinger clarified its restructuring stance, bagged a multi-year, multi-billion-dollar U.S. chipmaking deal from existing customer Amazon.Com Inc AMZN cloud unit and won a U.S. semiconductor grant. The chipmaker proposed to convert its foundry business into an independent unit with its board and raise external capital. The struggling chipmaker also looks to divest a partial stake in the programmable chip unit Altera. Also Read: Intel Missed Out on PlayStation 6 Chip Deal to AMD: Report Intel is also exploring the foundry business spinoff into a publicly traded company, CNBC cited a familiar source. On Monday, Intel also bagged up to $3 billion in direct funding under the CHIPS and Science Act on top of the $8.5 billion in grants and $11 billion in loans that the company previously won under the act. Under this act, Intel will help secure the U.S. domestic chip supply chain and collaborate with the Department of Defense (DoD) to enhance the resilience of U.S. technological systems. Intel will produce an AI fabric chip for Amazon Web Service on Intel 18A and a custom Xeon 6 chip on Intel 3. Gelsinger also shared plans to postpone its fabrication efforts in Poland and Germany by close to two years due to anticipated market demand and pulled back on its plans for its Malaysian factory. Intel remains committed to its projects in Arizona, Oregon, New Mexico, and Ohio, per the Intel chief. The chipmaker will also fast-track efforts to implement the $10 billion in cost savings and focus its products better on AI computing. Intel stock plunged 45% in the last 12 months as its foundry unit failed to capitalize on the AI shift, similar to contract chipmaker Taiwan Semiconductor Manufacturing Co TSM. Investors can gain exposure to Intel through Themes Generative Artificial Intelligence ETF WISE and Pacer Funds Pacer Data and Digital Revolution ETF TRFK. Price Actions: INTC stock is up 6.55% at $22.28 premarket at last check Tuesday. Also Read: Nvidia's AI Surge Powers 25% of S&P 500 Gains in 2024, Makes Co-founder Huang Among Fastest Growing: Report Photo via Shutterstock Market News and Data brought to you by Benzinga APIs

Intel Stock Rises On Multibillion Dollar AWS Deal, US Chip Grant Boost: What Do Analysts Think? - Intel (NASDAQ:INTC)

The company also provides several updates on its $10B cost savings plan. Intel Corp INTC shares climbed in early trading on Tuesday, after the company reported a multi-billion-dollar deal with Amazon.com Inc's AMZN cloud unit and received a U.S. semiconductor grant. Here are some key analyst takeaways. BofA Securities On Intel Analyst Vivek Arya reiterated an Underperform rating and price target of $21. Intel announced a collaboration with Amazon Web Services (AWS) on a custom AI fabric chip and custom Xeon server CPU chip, as well as a funding of $3 billion for government chips, Arya said in a note. "AWS win sounds impressive but INTC has already been supplying AWS with CPU for a long time so customization isn't exactly something new, while the AI fabric (networking) win on 18A will probably matter only from CY26," said Arya. While the company competes against tough Ethernet switch incumbency from companies like Broadcom Inc AVGO, the analyst wrote. Intel's future as "a leading-edge manufacturing entity" depends on its ability to execute on the next-gen 18A manufacturing node," he added. Check out other analyst stock ratings. Northland Capital Markets On Intel Analyst Gus Richard maintained an Outperform rating and price target of $42. Intel struck a deal worth $3.5 billion to make chips for the US military, of which it was awarded up to $3 billion for Secure Enclave, Richard said. Intel is the only alternative to Taiwan Semiconductor Mfg. Co. Ltd. TSM that the U.S. military has for advanced logic chips, as the Department of Defense requires the chips to be manufactured on US soil, he added. "AWS and Intel announced a co-investment in custom chip designs under a multi-year, multi-billion-dollar framework covering products and wafers from Intel," the analyst wrote. The U.S. government could continue providing more funding to the company, he further stated. KeyBanc Capital Markets On Intel Analyst John Vinh reaffirmed a Sector Weight rating on the stock. Apart from the government funding and AWS deal, Intel announced several updates on its $10 billion cost savings plan, Vinh said. The updates indicated the company will be "more than halfway through the 15K employee RIF target by year-end and will reduce/exit two-thirds of its real estate globally by year-end," he added. "We're very encouraged by these announcements and credit INTC management for being proactive regarding the initiatives that it controls, which is namely cost," the analyst wrote. Intel said it intends to make IFS an independent subsidiary, which is a good decision, he further stated. INTC Price Action: Shares of Intel had risen by 6.12% to $22.19 at the time of publication on Tuesday. Read More: * Intel's Slow-Burn Strategy: Foundry Revenues 'Not Till 2027,' Analyst Predicts Spin-Off Ahead Photo: Tada Images/Shutterstock.com Market News and Data brought to you by Benzinga APIs

Intel's stock is climbing -- here's why

From Nvidia to Apple, tech stocks could get a boost from Fed rate cuts, analysts say The chipmaker's shares closed up 6.3% on Monday at $20.91. During after-hours trading, its stock soared by over 10%. However, Intel's shares are down around 56.2% so far this year. On Monday, the U.S. Department of Defense and U.S. Department of Commerce announced Intel had been awarded up to $3 billion in direct funding under a part of the Chips Act known as the Secure Enclave. The program is meant to expand manufacturing of cutting-edge chips for the U.S. government. The Defense Department will execute the award. "The funding will support the manufacturing of microelectronics and ensure access to a domestic supply chain of advanced semiconductors for national security," the departments said in a joint statement. The Secure Enclave funding is separate from the up to $8.5 billion in direct government funding it expects to receive under the Chips Act, which is part of an effort to advance U.S. chipmaking amid the booming artificial intelligence industry and competition with China. The funding was announced in March, and is expected to support the chipmaker's plans to invest more than $100 billion in the U.S. over the next five years. The company plans to expand its U.S. semiconductor industry footprint with chipmaking sites in Arizona, New Mexico, Ohio, and Oregon. "Today's announcement highlights our joint commitment with the U.S. government to fortify the domestic semiconductor supply chain and to ensure the United States maintains its leadership in advanced manufacturing, microelectronics systems, and process technology," Chris George, president and general manager of Intel Federal, said in a statement. Also on Monday, Intel and Amazon Web Services (AMZN) announced a multi-year, multi-billion-dollar collaboration to advance U.S.-based chipmaking in Ohio. The chipmaker will produce an AI fabric chip for AWS on its most advanced process node, Intel 18A, and a custom Xeon 6 chip on Intel 3. The chipmaker is also considering plans to separate its foundry business from the company, and turn it into a subsidiary with its own board, CNBC reported. Meanwhile, Intel is reportedly looking for options to fix its faltering business. In August, the chipmaker missed profit expectations, partly due to its decision to "more quickly ramp" its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Intel chief executive Pat Gelsinger said on the company's earnings call. Gelsinger also announced the company's plans to cut spending, including by laying off more than 15% of employees.

Why Intel Stock Is Gaining Today | The Motley Fool

Investors hoping that support from the U.S. government will power Intel's turnaround got some good news recently. Intel (INTC 2.19%) stock is jumping in Monday's trading thanks to bullish news for the company's fabrication business. The semiconductor specialist's share price was up 2.3% as of 1:15 p.m. ET. Shares had been up as much as 4.7% earlier in the daily session. After the market closed last Friday, Bloomberg published a report stating that Intel had qualified to receive $3.5 billion in federal funding for the production of semiconductors for U.S. national defense. In addition to suggesting substantial contract wins, the report is a positive sign for other grants and loans that the company has been poised to receive through the CHIPS and Science Act. But despite the promising grant news and stock gains, there was also a bearish report for Intel's design and fabrication units today. The ability to fabricate advanced chips domestically has become a key economic and national security priority for the U.S. government. Right now, the vast majority of high-performance chips used for artificial intelligence (AI) and other advanced applications are manufactured by Taiwan Semiconductor Manufacturing in Taiwan. Intel has been at the center of the United States' push to improve domestic fabrication capabilities, but the company's recent financial and technological struggles have created uncertainty surrounding the plan. Bloomberg's report that Intel will likely receive new grants for the fabrication of high-performance chips for military and intelligence is helping to ease investor concerns. If the company does receive $3.5 billion in funding for chip manufacturing through the Pentagon's Secure Enclave initiative, it would be a significant win for the company's fab business. It could also suggest that the company is likely still on track to receive the full $8.5 billion in direct funding and $11 billion in loans apportioned through the CHIPS Act despite challenges facing the business. Reuters published a report this morning stating that Intel had lost a potential deal to design and manufacture chips that will be used in Sony's upcoming PlayStation 6 console. The deal could have generated billions of dollars in revenue for the chipmaker, but Sony reportedly made the decision not to use Intel's services back in 2022 due to pricing concerns. Instead, the design and fabrication contracts were reportedly won by Advanced Micro Devices and TSMC, respectively. If Reuter's report is correct, missing out on hardware contracts for PlayStation 6 would be a significant loss for Intel -- but it's not surprising that the stock is still climbing today. Governmental support is central to Intel's fabrication business and overall turnaround effort, and bullish indicators on that front are far more significant than missing out on design and fabrication deals for gaming hardware.

Intel Stock Rises After a Report of a $3.5B Pentagon Chip Deal

The contract comes on top of the potential $8.5 billion in grants and $11 billion in loans that Intel was awarded earlier this year from the CHIPS and Science Act of 2022. 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. Bloomberg said the new contract comes on top of a potential $8.5 billion in grants and $11 billion in loans that Intel was awarded in March under the CHIPS and Science Act of 2022, which is aimed at revitalizing U.S. semiconductor manufacturing and limiting reliance on Asia. Intel didn't immediately respond to Investopedia's request for comment Monday. Intel has struggled of late as rivals making artificial intelligence (AI) chips ate into its market share. Intel recently reported wider-than-anticipated losses, slashed jobs, and has watched its stock price tumble. Intel's stock, up more than 2% in recent trading, remains down more than 50% this year so far.

What's Going On With Intel Stock Monday? - Intel (NASDAQ:INTC)

The funding would come from a program named Secret Enclave which is funded by the Chips and Science Act. Intel Corporation INTC shares are trading higher on Monday after Bloomberg reported that the company qualifies for up to $3.5 billion in federal grants to produce semiconductors for the Pentagon. The Details: The company has faced competition from other chipmakers in seeking these funds and concerns regarding relying on one company for the Pentagon's needs. Although Intel is likely to be awarded the grants, it has not yet officially been awarded to the company. The money would add to the possible $8.5 billion in grants and $11 billion in loans that the company was previously awarded under the Chips and Science Act. Intel is still in the progress of negotiating this package and has not yet received the money. The money would support Intel's facilities in variety of states, including Arizona and Ohio. The potential new grants would come from a program entitled Secret Enclave, also funded by the Chips and Science Act, which seeks to secure production of advanced chips for military and intelligence purposes. How To Buy Intel Shares Besides going to a brokerage platform to purchase a share - or fractional share - of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument. For example, in Intel INTC's case, it is in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment. Related Link: OpenAI's 'O1' Model, Nvidia's AI Demand, Google's Missed Opportunity, And More: This Week In AI INTC Price Action: At the time of writing, Intel stock is moving 4.17% higher at $20.48, according to data from Benzinga Pro. Image: Photo via Shutterstock Market News and Data brought to you by Benzinga APIs