Intel (NASDAQ:INTC) shares surged nearly 9% on Friday as rumors of a potential takeover reignited investor excitement. The technology news site SemiAccurate sparked the frenzy, claiming it had reviewed and confirmed an email detailing an acquisition bid for the entire company.
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For Intel, takeover whispers are nothing new. Back in September, The Wall Street Journal reported that Qualcomm had floated the idea of a friendly acquisition. However, by November, the rumor mill suggested Qualcomm’s interest had “cooled.”
J.P. Morgan analyst Christian Crosby believes the market shouldn’t be shocked by the ongoing interest in Intel. After all, the company’s shares plummeted 54% over the past year, its CEO left abruptly, and its ratings have been downgraded multiple times. On top of that, Intel is in the midst of a significant transformation as it works to become a major player in integrated chip design and manufacturing. In recent moves, the company has sought buyers for non-core assets like Altera, announced the separation of its venture capital arm, and is even working to legally separate its Foundry unit.
Among the likely contenders, according to Crosby, Qualcomm remains a standout. The chipmaker’s earlier interest underscores how Intel’s capabilities could help diversify its operations, particularly as Apple’s influence as a key customer diminishes. Adding Intel’s foundry expertise could bolster Qualcomm’s competitive edge, creating a semiconductor powerhouse.
But the buzz doesn’t end there. Enter Elon Musk, the wildcard in this unfolding saga. Crosby speculates that Musk, whose ventures like Tesla, SpaceX, and xAI require enormous quantities of semiconductors, might have a vested interest in Intel’s assets. But not everyone is on board with the idea.
“While some investors naturally worried about scope for a more aggressively financed deal akin to the Twitter acquisition, we countered that the financial firepower behind the other entities in his portfolio is much more relevant: 1) SpaceX – recently valued at $350bn, private; 2) Tesla $1.3tn market cap, $20bn net cash, and Investment Grade rated; and 3) xAI – recently valued at $50bn, private. It goes without saying that there would be a lot of uncertainty as to how a deal here could play out, but we take heart in the fact that adding additional leverage on Intel (be it foundry or design) has little strategic merit and believe that any deal with the most wealthy individual in the country would likely imply credit improvement,” Crosby opined.
Overall, Intel’s prospects don’t appear too favorable among Wall Street analysts at the moment. With 21 Holds, 4 Sells, and a single Buy, the stock has a Hold (i.e., Neutral) consensus rating. However, the $24.42 average price target indicates an upside potential of ~14% from the current share price. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
