Why Intel Stock Is Skyrocketing Today

Source The Motley Fool

Shares of Intel (NASDAQ: INTC) are flying higher on Thursday. The company's stock gained 8.9% as of 11:00 a.m. ET but was up as much as 11.2% earlier in the day. Meanwhile, the S&P 500 was flat and the Nasdaq Composite lost 0.3%.

The chipmaker has fallen behind rivals like AMD and Nvidia in the all-important artificial intelligence (AI) market and is considering deals with several other chipmakers that would lead to a major shakeup.

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What happened

Over the weekend, The Wall Street Journal reported that Broadcom is looking into making a bid for Intel's product business, the heart of Intel, which designs and markets its own chips. The deal could involve the company being cut in two, with Taiwan Semiconductor stepping in to take over its other major business, manufacturing and fabrication.

Why it matters

For years, Intel was a leader in the chip industry, designing and manufacturing its own chips, but the company has fallen behind in the age of AI. In a bid to remain competitive, it created its foundry business, manufacturing chips for outside designers. The move hasn't worked out; the unit struggles to grow its customer base and bleeds cash. Intel's CEO stepped down a few months ago as a result of that failure.

If Intel successfully spins off its foundry arm, it could drive value for both of the resulting businesses. TSMC's expertise could help the fabrication arm find its footing, and a strategic merger with Broadcom on the design side could help revitalize the company. The deals could be lucrative for Intel shareholders.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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