Intel Stock Jumps On Investment Chats With Apollo Global And Qualcomm
Shares of Intel (INTC) were among the gainers in early trading on Monday after reports emerged that private equity firm Apollo Global Management might be considering a multibillion-dollar investment. The rumored investment, ranging from $3 billion to $5 billion, comes as Intel has long been seen as a friendly takeover play for chip powerhouse Qualcomm (QCOM).
Intel shares rose 2% following a 3% gain on Friday in the wake of speculation about the Qualcomm deal.
$5 Billion Investment From Apollo Global Management
Apollo Global Management reportedly mulling a $5 billion investment into Intel: A new Bloomberg report has the world’s largest alternative asset manager, Apollo Global Management considering a capital injection of between $1 billion and $5 billion as it looks to branch out in these great working-from-home times. Intel executives are said to be reviewing the offer, which could give a big shot in the arm to Intel, which has been staggering through bad year of chip sales.
Intel has a history of working with Apollo. Last month Intel scooped up $11 billion for its Irish fab from Apollo, strengthening the partnership.
Qualcomm’s Interest in Intel
Along with the group of Apollo, Intel is also having conversations with Qualcomm as per sources for a buyout. Intel’s $57 billion offer to acquire Qualcomm, if accepted, would top the world of tech megadeals set soaring Monday by Microsoft’s agreeing to pay $69 billion for gaming powerhouse Activision Blizzard.
But the deal is likely to run into tough regulatory problems, especially from U.S. antitrust worries. Some analysts have even likened this situation to other major tech deals that happened to fall by the wayside, like NVIDIA’s thwarted takeover of ARM Holdings and Broadcom’s failed bid for Qualcomm.
Mixed Market Reactions
Intel, whose shares rose 2% on Monday on news of the investment talks with Broadcom, was facing its own pressures last week; Qualcomm’s stock price eased off nearly 3% last Friday and was little changed in early trading on Monday. Likely due to complexity and regulatory attention investors appear uneasy over thoughts of Qualcomm trying to takeover Intel.
Intel’s AI Chips are stuck
Intel has been trying to break in to the AI market, which is growing like gangbusters, but it’s fallen behind rivals such as NVIDIA (NVDA) and AMD (Advanced Micro Devices). The two have made significant headway with their next-gen AI chips, seizing a large proportion of the market share for these AI processors, unlike that of Intel’s Gaudi AI processor, which has not gained much traction among tech giants such as Amazon, Google and Microsoft.
Now that Intel stock has plunged more than 57% since the beginning of 2024, it is trying to save $10 billion in costs by firing 15% of staff and halting some projects in Europe.
The Qualcomm Acquisition: A Gloomy Outlook
While there has been some speculation, analysts believe a Qualcomm-Intel tie-up would face long odds for success. While Qualcomm is best known for its mobile tech chips, and Intel makes processors, many at the time had taken this as an indication that Qualcomm might be interested in picking up Intel’s foundry business.
For so big a merger, it is likely that federal antitrust regulators would examine it closely and could raise questions about whether the deal could win regulatory approval. Recent takeovers of tech companies — such as NVIDIA’s unsuccessful bid to buy ARM Holdings — had run up against similar problems, Stifel analysts observed.
Apollo’s Investment: A Vote Of Confidence
The investment would be a vote of confidence in Intel’s plans to turn around. The firm itself has done similar deals before — most recently an investment in Western Digital all the way back last year.
It leaves Intel in purgatory, still mulling whether to take Apollo’s money or open itself up to the Qualcomm takeover that we exclusively reported was on the table. Neither deal is a guarantee, of course, and either would transform the industry — albeit far from painlessly.
Conclusion
The bump in Intel’s stock price follows reports that the company may be a takeover or investment target. It’s tough to say how well Intel may fare with Apollo out of the picture, and whether a Qualcomm takeover would be any better, offering both an opportunity and a different set of challenges. Both Intel and the AI world is watching closely to see how the former chip giant can respond effectively to this trend.