And so, it is now official. There is a deal between chip stock Intel (INTC) and consumer tech giant Apple (AAPL) that will see Intel make chips for Apple products. This is huge for Intel, and Intel investors made that point abundantly clear. Said investors sent Intel stock blasting up nearly 14% in Friday’s trading.
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The agreement is official, but it is also preliminary, so exact terms of the deal were not released. The talks that led to this agreement have been going on for over a year now. It is unclear just which Apple devices Intel will make chips for, whether Intel will focus on desktop Macs or whether it will handle the mobile devices, like iPhones and iPads.
This is actually good news for Apple as well, because Apple was looking at a substantial chip shortage. In fact, Apple’s last two earnings conference calls featured complaints about supply shortages and the accompanying impact on sales. CEO Tim Cook noted, “We think, looking forward, that the Mac Mini and the Mac Studio may take several months to reach supply-demand balance.”
$30 Billion Win
One of the greatest beneficiaries of Intel’s upward momentum of late has to be the United States itself, which now owns a load of Intel stock that has since appreciated to a degree that is nothing short of staggering. President Trump asserted that the United States has made around $30 billion as a result of its purchase.
In fact, some are starting to wonder if there is still time to get in on Intel. With shares now up substantially in just the last six months, some might think the easy money has run out. But some believe there is still room for growth. Indeed, Lip-Bu Tan noted that Intel’s focus has clearly shifted to growth. “A year ago the conversation around Intel was about whether we could survive. Today it’s about how quickly we can add manufacturing capacity.”
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on 11 Buys, 23 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 411.76% rally in its share price over the past year, the average INTC price target of $80.16 per share implies 35.51% downside risk.
