Intel (INTC) stock soared in early trading Monday after a Bloomberg report about a potential multibillion-dollar investment from Apollo Global Management.Disclosure: Yahoo Finance is owned by Apollo Global Management.)
According to Bloomberg, the private equity firm could invest up to $5 billion in Intel, adding that Intel executives are currently reviewing the offer. The news follows numerous reports that the chipmaker is considering a friendly takeover by another chip giant, Qualcomm (QCOM).
Intel shares rose 2% in early trading Monday after speculation about the Qualcomm deal boosted them more than 3% on Friday.
Qualcomm investors appear less pleased with the news of the Intel talks. Shares of the chipmaker fell about 3% on Friday and were little changed in early trading Monday.
Intel and Apollo already have a partnership. In June, the chipmaker sold an $11 billion stake in its Irish factory to Apollo.
The interest in Intel, and the resulting surge in its stock price, is welcome news for a tech company struggling to find its footing in a new market dominated by AI. Intel shares have fallen nearly 57% since the start of 2024. The company said in August that it was looking to cut $10 billion in costs by laying off 15% of its workforce and was pausing some projects in Europe.
Intel lags behind rivals Nvidia (NVDA) and Advanced Micro Devices (AMD), whose advanced AI chips have attracted billions of dollars of interest from Big Tech.
Intel’s Gaudi AI processor hasn’t yet gained traction with Amazon (AMZN), Google (GOOG) or Microsoft (MSFT). That’s because it was launched after the tech giants began working on their own AI chips, Patrick Moorhead, CEO of Moor Insights, told Yahoo Finance in a recent interview.
Meanwhile, a Qualcomm takeover would be the biggest tech merger since Microsoft bought Activision Blizzard for $69 billion. A deal of that magnitude would likely draw unwanted attention from federal antitrust regulators, whose scrutiny of the tech sector has intensified in recent years.
“Similar to other proposed mega-deals that have failed to clear high regulatory hurdles, such as NVDA’s offer to acquire ARM Holdings, Broadcom’s proposal to acquire Qualcomm and Qualcomm’s attempt to acquire NXP Semiconductor… we believe a Qualcomm/INTC deal would have little chance of securing regulatory approval,” Stifel analysts wrote in a note to investors Monday.
Even if it were successful, some analysts say a merger with Qualcomm wouldn’t necessarily be good for Intel or its shareholders — and that Intel would have to get out of the chipmaking business altogether.
“We continue to believe that Intel should exit the foundry business in the best interest of shareholders, as we believe the company has very little chance of becoming a profitable leading-edge foundry,” Citi analysts wrote in a note Monday. Intel’s foundry division makes chips for other companies.
Stacy Rasgon, a senior analyst at Bernstein, also told Yahoo Finance on Monday that it would be “difficult to do a deal where I think the risk justifies the returns.”
Qualcomm and Apollo’s interest in Intel comes as the company itself is trying to build momentum. Last week, CEO Pat Gelsinger announced an expanded multibillion-dollar partnership with Amazon and $3 billion in funding under the U.S. government’s CHIPS Act.
“This news, combined with our AWS announcement, demonstrates the continued progress we are making to build a world-class foundry business,” Gelsinger said in the announcement Wednesday.
Laura Bratton is a reporter for Yahoo Finance.
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