Remember when there were a lot of unanswered questions about chip stock Intel (INTC) and its involvement in Tesla’s (TSLA) Terafab project? It turns out at least some of those questions will not go unanswered for long. A new memo out from Lip-Bu Tan, spotted in CRN, revealed that Intel was planning to fill in the gaps on Terafab in “…the coming weeks.” This was welcome to investors, who gave Intel the benefit of the doubt and a modest boost in share prices in Wednesday afternoon’s trading.
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Forget margin or options. Here's how the pros trade TSLAThe memo revealed that this was a “strategic alliance” between Intel and Tesla, as well as the private companies adjacent to it. The memo noted, “His (Elon Musk‘s) expansive vision across AI, transportation, communications, robotics and space travel relies heavily on an ample and uninterrupted supply of silicon chips. Intel is thus a natural partner to help him realize his vision.”
It is good to know that details will be coming fairly soon, but there remain many unknown points about the deal. Who will have the intellectual property rights stemming from the deal? Who will handle production? How much cash is involved? These are just some of the issues that are unresolved as yet, and issues that Lip-Bu Tan will need to make concrete for investors to have much confidence in the move at all.
An Iconic Brand
We know that Intel’s facilities are sufficiently valuable that the United States government is willing to invest in the company just to keep chip production in the United States. And with that in mind, it is little surprise that USA Today recently put Intel on its list of Iconic Brands, a series designed to celebrate American innovation and production during the year of the 250th anniversary of America’s founding.
Intel’s history goes back to 1968, and Intel, over the years, became one of the biggest names in processors not only in the United States, but throughout the world as well. Back when Intel got started, it actually needed to purchase the rights to the name Intel, which at the time was owned by a hotel chain. It also became one of the first companies to be listed on the NASDAQ exchange.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on six Buys, 24 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 231.83% rally in its share price over the past year, the average INTC price target of $52.90 per share implies 16.94% downside risk.
