Intel Stock (NASDAQ:INTC) Slips as Intel Mulls Sale of Edge Computing and Networking Units

We know that chip stock Intel (INTC) has been suffering from a bit of a cash crunch since it put so much into setting up its foundry operations. We also know the foundry operations will not break even much before 2027, if at all. This combination of factors likely led to new reports that Intel is mulling a pretty big sale. Investors, though, were not exactly pleased, and sent shares slipping fractionally in Tuesday afternoon’s trading.

The latest reports from Reuters noted that Intel was mulling a sale of its network and edge businesses, both of these said to be part of the “less than crucial” part of the business that new CEO Lip-Bu Tan has been previously seen as interested in divesting. But this does not mean more layoffs, the report noted, as the “tens of thousands of employees” contained therein will be transferred into PC and data center chips, two of the new Intel’s biggest operations.

The report also noted that Intel has started the process of making the sale already, talking to “third parties” that might be interested. However, this is still very early-stage stuff, as Intel has “…not yet launched a formal deal process for the NEX unit,” as it is known. Intel has also interviewed, but not yet hired, an investment banker to handle the deal itself. Actually, it has interviewed more than one, but the hire is still not made.

A Lot of Little Makes One Big

Further, we saw new word about a new strategy for Intel, as it looks to get a better foothold in the graphics processing unit (GPU) market. While most of that market is going to Nvidia (NVDA), Intel is looking to take Nvidia down by a death of a thousand cuts strategy. Essentially, Intel wants to offer cheap GPUs that can be used in tandem, allowing several of them to work together to provide similar power to the Nvidia line.

Intel’s Battlemage B60 card comes in at about $500 of the cost of a PC, though reports suggest the price might go higher when it goes live. That compares wonderfully to the $1,250 to $2,400 Nvidia’s RTX 4000 Ada and 4500 Ada chips fall into, and even better against Nvidia’s RTX Pro 6000, which comes in at $8,565. Thus, getting four or five B60s together will come in at a bargain against the 6000, and not be especially far off in terms of performance, reports note.

Is Intel a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 25 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 32.64% loss in its share price over the past year, the average INTC price target of $21.22 per share implies 0.24% downside risk.

See more INTC analyst ratings

Disclosure