Is Intel stock about to rocket out of the slump?

Intel has secured AWS as a major customer for its foundry services—a significant victory in its quest to reassert power in a market dominated by TSMC. Industry analysts observe positive momentum for Intel in terms of securing foundry wins. Landing AWS is more than just gaining a new client; it's a validation of Intel's capability to manufacture chips for external entities, reinforcing its position in the competitive foundry arena.

But Intel's ambitions appear to stretch beyond mere partnerships. There are indications that the company is setting the stage to split into two distinct entities: one focusing on its core chip design and manufacturing, and another dedicated to its foundry services. This potential bifurcation hints at a strategic realignment, one that could streamline operations and ease concerns of competition and conflicts of interest for prospective clients.

The rationale behind establishing an independent foundry subsidiary is interesting. Such a move would be as close as possible to putting the right walls and guardrails around Intel's foundry operations. This separation would allow other customers to feel comfortable knowing they will have dedicated capacity and wafer allocation, making Intel's services more attractive to large-scale clients requiring substantial resources.

More bullish initiatives for Intel

This strategic shift comes at a time when Intel is making headlines with several other significant developments. On September 16, the company was awarded up to $3 billion (USD) in direct funding under the CHIPS and Science Act for the Secure Enclave program. This initiative aims to expand the trusted manufacturing of leading-edge semiconductors for the US government, enhancing national security and technological capabilities—a move that underscores Intel's commitment to bolstering US-based chip manufacturing amid global supply chain concerns.

Earlier in the month, Intel unveiled its new Core Ultra processors, marking a significant leap forward in performance and efficiency for the AI-age. These processors boast enhanced capabilities for AI tasks, improved graphics performance, and better energy efficiency, positioning Intel at the forefront of the evolving computing landscape.

Intel's CEO Ben Bajarin has been vocal about the company's turnaround efforts. Addressing employees recently, he highlighted the growing momentum in Intel's foundry business, citing the AWS deal and other recent wins. He emphasized ongoing cost-cutting measures and reaffirmed Intel's commitment to expanding production global capacity to meet market demand. A "highly productive and supportive" Board of Directors meeting further suggests confidence in the company's strategic direction.

While specific details of the collaboration remain undisclosed, the multi-billion-dollar framework suggests a substantial investment that could impact Intel's revenue and profitability in the coming years. Investors are likely weighing these developments carefully right now.

Will this boost confidence in Intel's turnaround efforts and drive up its stock price?

INTC on the charts

Intel's current market performance presents a mixed picture. As of the latest data, the stock is trading at $20.31, with a 52-week high of $51.28 and a low of $18.51. 

Technical indicators show a short-term uptrend, but overbought conditions hint at a pullback. The Relative Strength Index (RSI) sits at 70.86—territory that typically signals an overbought asset. Moving averages paint a bullish short to medium-term outlook, yet the 200-day moving average above the current price suggests lingering bearish sentiments in the long term.

For traders, this could be a signal to consider taking profits or tightening stop-loss orders on existing positions. Investors might exercise caution, perhaps waiting for a clearer break above the 200-day moving average or a pullback to a support level before committing to new positions. The market's reaction to Intel's strategic moves will be crucial in the coming months.

Conclusion

Looking ahead, the long-term implications of the Intel-AWS collaboration are profound. Could this partnership accelerate AI innovation, leading to the development of more powerful and efficient AI models and applications? Will it strengthen the U.S. semiconductor industry's position amid the ongoing tech rivalry with China? And importantly, will Intel's strategic shift towards an independent foundry subsidiary set a new industry standard, prompting others to follow suit?

As Intel navigates this transformative period, one thing is certain: the stakes are high, and the industry is watching. The company's ability to execute on its strategic vision could redefine its future and potentially alter the semiconductor landscape. Investors, competitors, and tech enthusiasts alike will be keenly observing how this narrative unfolds.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.

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Author:

Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.