Last week we talked about the trials and tribulations of Intel (NASDAQ: INTC) stock. At the time, it’d slumped 60% jeopardizing its place in the Dow Jones Industrial Average.
Indeed, things were looking rather bleak, but in a testament to just how quickly circumstances can change in the investing world, a few angels intervened on Intel’s behalf.
First, Intel revealed a new multi-year, multi-billion-dollar collaboration with Amazon that will see the company manufacture AI chips for AWS. This is a huge vote of confidence for Intel, which has struggled to keep pace with Nvidia.
AWS already designs several data center chips, with Intel producing at least one version. And going forward it expects to manufacture more AWS chips through its 18AP and 14A manufacturing processes.
Who Lost 4.3 Million Tons of Lithium?
For more than 40 years, an oil company has been using brine to produce oil on its 671-square-mile property in northwestern Alberta.
And for almost as long, it’s been known that this brine is abundant in a metal called lithium... the building block of today’s rechargeable batteries.
At today’s prices, that estimated 4.3 million tons of lithium dissolved in these brine ponds is worth more than $320 billion.
The problem is, until recently, nobody could effectively extract this lithium from the rest of the solution.
It took a young tech company headed up by petrochemical industry veterans and an agreement with the oil producer, but today that massive lithium resource is about to go into commercial production.
You’re going to want to see this before the story progresses any further.
“This expansion of our longtime relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for customer workloads,” said Intel CEO Pat Gelsinger. “Intel’s chip design and manufacturing capabilities, combined with the comprehensive and broadly adopted cloud, AI, and machine learning services of AWS, will unleash innovation across our shared ecosystem and support the growth of both businesses, as well as a sustainable domestic AI supply chain.”
That news alone was enough to cause a nice pop in Intel stock. But things got even more interesting as the week came to a close. That is, late Friday, news broke that Qualcomm has floated a proposal to take over Intel in a friendly buyout.
The deal would be massive. Intel has a market cap of $95 billion — even after losing half its value this year. And Qualcomm is roughly double that. There’s no doubt regulators would take a long, hard look at any potential tie-up.
Still, it’d make a lot of sense for Qualcomm — a major mobile chip supplier that’s branching back out into PCs. Qualcomm also relies on TSMC and Samsung to manufacture its chips. But it could bring that production in house through Intel’s foundry business.
Qualcomm is in an advantageous position because it’s far more profitable than Intel, as well. Its second-quarter net income totaled $2.13 billion, or $1.88 per share.
By comparison, Intel reported a paltry $0.02 per share in the second quarter, and the company forecast a $0.03 loss for the third. On a GAAP basis, Intel took a net loss of $1.61 billion, or $0.38 per share.
However, Qualcomm isn’t the only company looking to stake a claim in Intel. Apollo Global Management has also reportedly offered to make a multi-billion-dollar investment (as much as $5 billion) in the beleaguered chipmaker.
Together, this news has helped Intel stock rebound by 19% in the past two weeks. Of course, that hardly means things have turned around.
As I mentioned, the company projects a money-losing third quarter after seeing its revenue slip by 1% in the second quarter. It’s losing out on valuable contracts like the one for Sony’s PlayStation 6 chip.
It’s no wonder the sharks are circling. We’ll just have to see whether or not one actually takes a bite.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more...
In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.
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