Intel stock (INTC) popped in early buying and selling Monday following a Bloomberg report of a potential multibillion-dollar funding from Apollo Global Management. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
The non-public fairness agency would make investments as much as $5 billion in Intel, the Bloomberg report stated, including that Intel executives are weighing the provide. The news follows intently on the heels of a number of experiences that the chipmaker is contemplating a pleasant takeover by one other chip large, Qualcomm (QCOM).
Intel shares rose 2% early on Monday, after hypothesis over the Qualcomm deal propped them up by over 3% on Friday.
Qualcomm buyers have seemingly been much less happy with the report of talks with Intel. The chipmaker’s shares fell about 3% Friday and had been little modified in early buying and selling on Monday.
Intel and Apollo have a preexisting relationship. In June, the chipmaker bought Apollo an $11 billion stake in its Ireland manufacturing facility.
The curiosity in Intel — and its subsequent stock value increase — is welcome news for a tech firm that’s struggled to search out its footing in a brand new AI-dominated market. It is attempting to chop $10 billion in prices by laying off 15% of its workforce and pausing some of its initiatives in Europe.
Intel shares are down almost 57% from the start of 2024. The firm has lagged behind rivals Nvidia (NVDA) and Advanced Micro Devices (AMD), whose superior AI chips have captured the curiosity of Big Tech to the tune of many billions of {dollars}.
And Intel’s Gaudi AI processor hasn’t gained steam with the likes of Amazon (AMZN), Google (GOOG), or Microsoft (MSFT). That's as a result of it debuted after the tech giants started working on their very own AI chips, Moor Insights CEO Patrick Moorhead instructed Yahoo Finance in a latest interview.
Meanwhile, a takeover by Qualcomm can be the biggest tech merger since Microsoft bought Activision Blizzard for $69 billion. A deal of such scale would possible seize undesirable consideration from federal antitrust regulators, whose scrutiny of the tech business has ramped up in recent times.
“Similar to other proposed mega-deals that were unable to clear high regulatory hurdles, such as NVDA’s bid to acquire ARM Holdings, Broadcom’s proposal to acquire Qualcomm and Qualcomm’s attempt to acquire NXP Semiconductor … we believe that a Qualcomm/INTC deal would be unlikely to garner regulatory approval,” Stifel analysts wrote in a notice to buyers Monday.
Even if profitable, some analysts say {that a} Qualcomm merger would not essentially be good for Intel or its shareholders — and that Intel ought to get out of the chipmaking enterprise altogether.
“We continue to believe Intel should exit the foundry business in the best interest of shareholders as we believe the company has a very small chance of becoming a profitable leading-edge foundry,” Citi analysts wrote in a notice on Monday. Intel's foundry business manufactures chips for different firms.
Bernstein senior analyst Stacy Rasgon additionally instructed Yahoo Finance on Monday that it might be “hard to do a deal where I think the risk would justify the returns.”
Qualcomm's and Apollo’s curiosity in Intel comes as the corporate tries to construct some of its personal momentum too. Last week, CEO Pat Gelsinger introduced an expanded, multibillion-dollar partnership with Amazon and $3 billion in CHIPS Act funding from the US authorities.
“This news, combined with our AWS announcement, demonstrates the continued progress we are making to build a world-class foundry business,” Gelsinger stated in the announcement last Wednesday.
Laura Bratton is a reporter for Yahoo Finance.
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