Why Intel Stock Drifted Higher Today

Key Points

• The impact of the Nvidia buy-in is still being felt.

• A recent analyst recommendation upgrade also lifted sentiment on the chipmaker.

• 10 stocks we like better than Intel ›

Tuesday wasn't one of the more memorable days on the stock exchange for U.S. chip titan Intel (NASDAQ: INTC). There was little fresh news affecting the company directly, still it managed to drift 2% higher in price across the trading session. Lingering positive sentiment related to the recently announced Nvidia buy-in, in addition to recent analyst moves, played a role in this.

At any rate Intel beat the S&P 500 index, which fell by 0.6% Tuesday.

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Chipping away

To a degree, investors are still reacting to the blockbuster news from the end of last week that Nvidia will invest a meaty $5 billion in Intel's equity, and the two chip giants will collaborate on certain projects. More recently, on Monday a European bank upgraded its recommendation on the stock.

Image source: Getty Images.

Mind you, the analyst didn't exactly join the bull stampede on Intel; still any upgrade is reason for renewed optimism. That pundit, Hans Engel of Austrian lender Erste Group, changed his recommendation to hold from his previous sell. It wasn't immediately clear what price target Engel set.

According to reports, the analyst's modification is due to what he considers to be progress in the company's transformation program. He wrote in his Intel update that the chipmaker has successfully increased production speed, which should have positive knock-on effects with key fundamentals.

Potential flip into the black?

Speaking of Nvidia, Engel wrote that the company and fellow state-of-the-art chip manufacturer Broadcom are currently testing Intel's production platform, which bodes well for its future. Also, in his view, if Intel can continue roping in new clients for its contract manufacturing business, the company has a shot at returning to profitability.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.