Intel shares soar on news of investment by owner Arm

Intel quotes rose sharply on the news that SoftBank will invest $2 billion in the struggling chip maker. These investments are a vote of confidence in the legendary American company, which is going through difficult times and is trying to restructure its business.

Shares of Intel, which has been in a protracted crisis, jumped in the evening session after the close of main trading on August 18 in New York. Traders rushed to buy them after the Japanese SoftBank - the main owner of one of the world's largest processor designers Arm - unexpectedly for the market decided to invest in Intel about $2 billion in exchange for its shares at a price close to the market ($23 per paper). Thanks to this investment, SoftBank will become one of Intel's ten largest shareholders with a stake of about 2%, Reuters reported, citing an Intel representative and LSEG data.

Earlier in the day it became known that the administration of U.S. President Donald Trump was negotiating the acquisition of 10% of Intel shares. The cost of such a package is comparable to the amount of funding that the company received from the White House under the Chips and Science Act. On this news, Intel shares fell by 3.7% during the main trading session. However, in additional trading after SoftBank's announcement of its investment in Intel, the quotes turned around and grew by 5.4%.

SoftBank's shares fell by more than 5% in the morning of August 19 in Tokyo. By the lunch break, the drawdown was down to 2%.

Intel is striving to prove that it can once again become a technological leader after losing to TSMC in contract chip production and Nvidia in chip development. In turn, SoftBank plans to invest hundreds of billions of dollars in building data centers for artificial intelligence in the United States together with OpenAI, Oracle and the Arab MGX fund. SoftBank's decision to invest in Intel is a serious vote of confidence in the legendary American chip maker, which is struggling to gain a foothold in the AI industry, Bloomberg states.

What is happening indicates the instability of Intel quotes, warned Investor's Business Daily. The relative strength rating of Intel shares, calculated by the publication, jumped from 25 to 72 points last week. Such growth indicates a sharp improvement in the dynamics of the stock - if two weeks ago Intel securities were weaker than 75% of securities on the market, last week they outperformed 72% of all others in terms of price dynamics over the past year.

According to MarketWatch, analysts this week have not yet revised either their investment ratings or their target prices for Intel shares. A week ago, investment firm Bernstein reiterated a $21 per share target for Intel with a neutral rating. According to FactSet calculations, 37 economists out of 43 now adhere to the neutral rating (Hold) on Intel shares. Two experts recommend buying the company's shares (Buy and Overweight), four recommend selling (Sell and Underweight).

This article was AI-translated and verified by a human editor