Intel (INTC) Shares Jump After SoftBank Scoops up $2 Billion Stake

Aug 19 - Intel (NASDAQ:INTC) shares jump 5% in pre-market trading on Tuesday after SoftBank Group agrees to buy $2 billion of newly issued Intel stock at $23 a share. The move gives SoftBank a roughly 2% stake without a board seat and signals outside support for Intel's turnaround. SoftBank will not commit to buying chips, company sources say.

Warning! GuruFocus has detected 10 Warning Signs with INTC.

The capital injection arrives as Intel faces steep competition from Advanced Micro Devices (NASDAQ:AMD) and works to repair execution in its foundry push. Company executives plan to reshape the contract-manufacturing approach to attract major customers and improve competitiveness with TSMC (TSMC). Investors also digest reports the U.S. government may consider a minority stake, adding a policy layer to global markets' reaction.

SoftBank's investment complements its broader AI and data-center commitments, including large-scale projects that require added computing capacity. Markets react quickly: SoftBank shares slip while Intel's stock rallies.

Receiving the funding is seen by analysts as giving Intel breathing space when it comes to the areas of product development and upcoming capital projects, with the caveat still being margins and customer wins.

The acquisition provides Intel with time and alternatives as it struggles to recapture market share in PCs and information- processing chips.

Is INTC Stock a Buy?Intel (INTC) Shares Jump After SoftBank Scoops up $2 Billion Stake

Based on the one year price targets offered by 33 analysts, the average target price for Intel Corp is $21.82 with a high estimate of $28.00 and a low estimate of $14.00. The average target implies a downside of -7.78% from the current price of $23.66.

Based on GuruFocus estimates, the estimated GF Value for Intel Corp in one year is $23.31, suggesting a downside of -1.48% from the current price of $23.66.

This article first appeared on GuruFocus.

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