Why Intel Stock Surged This Week
Key Points
Intel repurchased half of a key chip-building facility.
Analysts say the move bodes well for the semiconductor titan's AI prospects.
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Shares of Intel (NASDAQ: INTC) rose sharply this past week after the chip designer moved to strengthen its foundry network.
The popular tech stock was up nearly 17%, according to data provided by S&P Global Market Intelligence.
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Image source: Intel.
Wall Street likes this deal
Intel reached an agreement with Apollo Global Management (NYSE: APO) to repurchase a 49% stake in its Fab 34 site in Ireland for $14.2 billion. The facility produces a high volume of Intel's Xeon 6 and Core Ultra processors, which power data center servers and artificial intelligence (AI)-enabled personal computers.
Intel says the acquisition will begin to boost its per-share profits by 2027. Analysts say the deal is a sign of the company's strengthening financial profile and forthcoming customer wins.
UBS analyst Timothy Arcuri, for one, believes that Intel wouldn't have agreed to buy back Apollo's stake if it didn't expect to gain new foundry customers.
For another, J.Gold Associates analyst Jack Gold views the acquisition as evidence that "the market is buying Intel products at scale."
And Gil Luria, head of technology research at D.A. Davidson, expects the deal to drive Wall Street to lift its earnings projections for Intel.
A bullish signal
Fab 34 is central to Intel's AI-driven expansion plans. Management's decision to buy the facility outright reflects its confidence in the semiconductor leader's manufacturing prospects. And investors are understandably excited about the implications for further share price appreciation.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool has a disclosure policy.
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