The Focus This Week: Sharing Intel
There will be no shortage of company earnings announcements this week, but Intel’s likely to grab the most attention. The US chipmaker’s stock has been on a blistering rally – rising 80% since early August – driven by a couple of key factors.
First, in just the past few months, Intel’s pulled in $15.9 billion in fresh capital by adding three heavyweight names to its shareholder roster: Nvidia, SoftBank, and the US government. Add in the recent sale of a 51% stake in its programmable chip unit, Altera, to private-equity firm Silver Lake, and Intel’s total haul this year climbs to $20.4 billion. That’s boosted Intel’s cash pile to a hefty $47 billion – enough to bankroll its big manufacturing investments for at least the next three years.
Second, Intel’s struck a strategic alliance with longtime rival Nvidia to co-develop chips for PCs and data centres. That’s a big deal: after being left in the dust, Intel’s finally found a way to tie its fortunes to the frontrunner’s growth. The duo says the partnership could eventually bring in $50 billion in revenue a year.
It’s too early for that to show up in Intel’s third-quarter numbers, but investors will be watching for signs that the turnaround is sticking – and for any hint that Intel might be gaining ground on chipmaking giant TSMC. Because while Intel’s playing catch-up, its rivals are still racing ahead.
Just this month, AMD struck a blockbuster deal with OpenAI that’ll see the ChatGPT maker deploy an eye-popping six gigawatts’ worth of AMD chips over multiple years. Broadcom followed up a few days later with a ten-gigawatt custom chip deal of its own. And last week, TSMC reported record quarterly profit, fuelled by the same AI wave. Nvidia’s data centre business alone pulled in more revenue last quarter than Intel’s managed in the past two years combined.
With so much at stake, Intel’s results this week are classified as need-to-know for investors. They could shed light on the chipmaker’s comeback story – and whether its bold bets might actually bridge the gap with its faster-moving rivals.
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