A new chipmaking rival might be arriving on the scene before long, but that only bolstered sentiment on one of the sector’s top incumbents on Friday. Investors flocked to Intel (NASDAQ: INTC) stock on the news, pushing its share price 3% higher. That performance notably exceeded the gain of the S&P 500 index, which despite a generally good day for stocks didn’t come close, with its 1.2% rise.
A new kid on the chip block
That morning, Bloomberg reported that Sam Altman, CEO of privately held tech darling OpenAI, intends to build a network of semiconductor manufacturing factories.
Citing unidentified “several people with knowledge of the plans,” the financial media outlet said that Altman has held talks with a number of potential investors to provide the funding for such a project. Building out a chain of such facilities would be vastly expensive, as would the funding requirements to keep such an effort operational.
Among the entities that have discussed the plans with Altman is SoftBank Group, the well-capitalized tech sector investment company. However, Bloomberg’s sources said that all talks are at an early stage, and the number of potential companies and individuals that might become involved is not yet known.
Altman’s OpenAI is the developer of ChatGPT, arguably the most highly visible and one of the more popular artificial intelligence (AI) apps. While his success in the AI field is indisputable, it’s an open question whether he can lead an effort to compete effectively in chip manufacturing.
The veterans should benefit from this news
Whether Altman can or not, the news illustrates the fact that demand for powerful chips is sky-high just now. That means the Intels of this world, as long-established captains of the chip ship, are in a very good position to benefit. No wonder that investors pounced on the incumbent’s stock in the wake of the news.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
Why Intel Stock Cruised to a 3% Gain Today was originally published by The Motley Fool
Jessica Roberts is a seasoned business writer who deciphers the intricacies of the corporate world. With a focus on finance and entrepreneurship, she provides readers with valuable insights into market trends, startup innovations, and economic developments.
