SoftBank’s (OTCPK:SFTBY) surprise $2B investment into Intel (NASDAQ:INTC) is a “vote of confidence,” even if it’s coming at a time of great uncertainty, investment firm Wells Fargo said.
“We think the positive move in INTC post this announcement is justified as we think investors would consider this to reflect a vote of confidence in INTC’s long-term transformation efforts, which includes the company’s focus on improving its balance sheet positioning,” Wells Fargo analyst Aaron Rakers wrote in a note to clients. Rakers has an Equal-Weight rating and $22 price target on Intel.
Intel shares rose nearly 5% in premarket trading, as SoftBank said it would pay $23 per share for a 2% stake in the company.
The investment from SoftBank, which is led by Chairman and CEO Masayoshi Son, comes at a time when Intel, led by CEO Lip-Bu Tan, faces an uncertain future. The Trump administration has reportedly discussed taking a stake in the company — perhaps to the tune of 10% — in an effort to shore up its balance sheet and boost domestic production of advanced semiconductor manufacturing.
Taiwan Semiconductor (TSM) and, to a lesser extent, Samsung (OTCPK:SSNLF), dominate the advanced semiconductor manufacturing market.
A potential investment from the Trump administration may have emerged earlier this month when Tan met with President Trump at the White House, just days after the president called for him to resign amid worries he is “highly conflicted.” (Tan responded to the resignation call, saying he has “always operated within the highest legal and ethical standards.”)
“The meeting was a very interesting one,” Trump said in a post on Truth Social. “His success and rise is an amazing story. Mr. Tan and my Cabinet members are going to spend time together, and bring suggestions to me during the next week.”
Tan was named Intel CEO in March after the company spent a few months searching for a replacement for Pat Gelsinger, who left the company in December 2024.
The potential investment in Intel by the U.S. Department of Commerce would help the company expand its domestic foundry plans, particularly a massive hub in Ohio. Intel is already the largest recipient of funding through the CHIPS Act. It has been slated to receive $10.9B in CHIPS Act grants for commercial and military programs combined.
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(Seeking Alpha’s Ravikash Bakolia, Carl Surran and Brandon Evans contributed to this story.)