Why Intel Stock Was Soaring This Week

Shares of Intel (NASDAQ: INTC) were on the move this week, on a number of different news items as investors seemed to spy opportunity in the beaten-down legacy chipmaker.

While the company has mostly played the role of the aging laggard in the artificial intelligence (AI) boom, this week's developments were a reminder that the stock has a number of assets that are arguably undervalued.

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According to data from S&P Global Market Intelligence, the stock was up 26% for the week as of Thursday's close.

Image source: Getty Images.

Wall Street rumors buoy Intel

Intel is in the middle of yearslong pivot of opening its foundry business up to new customers. After forcing CEO Pat Gelsinger out in December, there have been questions about whether Intel would sell the foundry business outright and just seek to be a chip designer.

However, that asset base also makes Intel attractive at a time when U.S. policy is to move chip production back to the U.S.

That logic ties into the two primary factors lifting Intel stock this week. First, rumors started circulating that TSMC, the world's biggest chip foundry, could form some kind of joint venture with Intel to help it manufacture advanced chips in the U.S. These rumors don't seem to have come from either company, and instead evolved in the media based on the federal government's desire to make the U.S. a hub of chip manufacturing.

Relatedly, the stock also got a jolt after Vice President JD Vance said that the Trump administration would "ensure that the most powerful AI systems are built in the U.S. with American designed and manufactured chips."

Investors interpreted that as a good sign for Intel.

Is Intel's foundry biz an asset or an albatross?

Intel is losing billions of dollars a year, but the company is the biggest U.S. chip manufacturer, giving it a possible advantage at a time when the federal government wants to bring chip production home.

Making that policy a reality has so far proven harder than expected, and some lawmakers have cast doubt on whether it's wise for the U.S. to pour billions into the struggling company through the CHIPS Act.

At this point, this week's gains seem to be mostly based on conjecture, but it does show the potential for the foundry business to drive a recovery in the stock. Still, that alone isn't a reason to buy Intel stock.

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Jeremy Bowman has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Intel and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.