Intel is having a brutal year — but suddenly everybody wants a piece of it
Intel (INTC) is reportedly in talks for two multi-billion dollar deals — including a takeover — as the struggling chipmaker continues to draw interest from investors.
Bloomberg, citing unnamed sources familiar with the matter, reports that alternative asset manager Apollo Global Management (APO) has offered to invest as much as $5 billion. That comes just days after The Wall Street Journal reported that Qualcomm approached Intel with a takeover bid.
Intel stock rose 4% to $22.69 per share in pre-market trading Monday.
After missing revenue expectations for its second-quarter earnings in August, the once-dominant chipmaker’s stock fell 27%. The company reported revenue of $12.8 billion in the second quarter of 2024, falling short of Wall Street’s $12.9 billion estimates.
The earnings miss was partly due to Intel’s 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.
So far this year, Intel has seen its stock slide 54%, as it falls behind new rivals like Nvidia (NVDA) amid the artificial intelligence boom.
To help give its business a boost, the Santa Clara, California-based company last month announced a plan to save $10 billion in 2025. That includes reducing its headcount by roughly 15,000, or 15% of its workforce. Gelsinger said these were the “most consequential changes” in the company’s history.
Intel has also reportedly hired Morgan Stanley and other advisors to help fend off potential activist investors, according to CNBC.
But it’s looking to mount a turnaround, starting with several billions of dollars worth of investments from a pair of lucrative contracts announced last week. The Department of Defense and 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, which is meant to expand manufacturing of cutting-edge chips for the U.S. government. Also last week, Intel and Amazon Web Services (AMZN) announced a multi-year, multi-billion-dollar collaboration to advance U.S.-based chipmaking in Ohio.
David Dietze, senior investment strategist at Peapack Private Wealth Management (PGC), previously told Quartz that the AWS partnership and additional federal funding could mark the beginning of a turnaround for Intel.
