Intel’s Stock Rises as Company Considers Strategic Options

(Reuters) – Intel’s shares rose more than 3% in early trading on Friday, following reports that the struggling chipmaker is exploring strategic options, including a potential merger or split. This comes after one of the stock’s worst slumps in decades.

Reports indicate that Intel is collaborating with investment bankers to evaluate various strategies, such as separating its flagship product business from its underperforming manufacturing unit, according to Bloomberg News. Additionally, discussions about possibly scrapping some factory projects are underway.

Intel’s aggressive expansion of chip production sites is central to its turnaround plans, aiming to position itself as a contract manufacturer for other chip firms—a capital-intensive initiative that has impacted its financials significantly.

As a result of these developments, Intel’s market value was set to increase by over $4 billion on Friday, having dipped below $100 billion earlier in August for the first time in thirty years. This report has brought some relief to investors who believe that splitting the business could be an ideal avenue as Intel navigates the AI landscape, where it currently lags behind competitors like Nvidia and AMD.

Year-to-date, Intel’s shares have plummeted about 60%, markedly worse than AMD’s less-than-2% decline, while Nvidia’s shares have more than doubled in value this year.

The downward trend followed a disappointing quarterly report released in August, announcing a pause in dividends and layoffs impacting 15% of its workforce, further torpedoing the stock’s performance.

Currently, Intel’s stock trades at about 24 times expected earnings, contrasted with AMD’s higher ratio of 30.6 and Nvidia’s 33.7 times expected earnings.