Intel shares rose 4% Wednesday after Bank of America reaffirmed its Buy rating and $160 price target, calling the $20 billion stock offering a sign of confidence in the chipmaker's foundry strategy despite near-term earnings dilution.
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Intel jumps 4% as BofA backs foundry strategy despite dilution
Intel shares rose 4% Wednesday as Bank of America backed the chipmaker's foundry strategy after its $20 billion stock offering.
"The offering may dilute near-term earnings, but it reflects growing confidence in Intel's long-term foundry strategy," analysts at BofA Securities said.
The stock traded above $101, up from Tuesday's close of $97.71. Intel priced 210.5 million shares at $95 each, upsizing the deal from $15 billion to $20 billion on demand that reached approximately $100 billion, according to Bloomberg. The offering represents 4.2% dilution and is expected to generate about $19.7 billion in net proceeds.
BofA maintains a Buy rating with a $160 price target, implying roughly 57% upside. The capital raise funds Intel's manufacturing expansion, including 18A and 14A process nodes and the Ohio fab complex. The stock remains up about 164% in 2026.
The U.S. government, which holds a 9.9% stake acquired at $20.47 per share in August 2025, declined to participate in the offering, allowing its position to dilute. Commerce Secretary Howard Lutnick approved the plan after Chief Executive Lip-Bu Tan reached out last week, according to Semafor.
Intel's second-quarter results showed revenue of $16.1 billion, up 25% year over year, with GAAP gross margin expanding 12.9 percentage points to 40.4%. Tan called it the company's highest revenue growth in over 15 years. Third-quarter guidance projects revenue between $15.8 billion and $16.8 billion.
Wall Street remains split. The 49-analyst consensus is Hold with an average price target of $107.93. Targets range from Rosenblatt's $80 sell to BofA's $160 buy. JPMorgan rates the stock Underweight at $85, while Baird is Neutral at $125.
The $95 offer price now serves as a key technical level. Shares fell 4.1% Monday when the offering was first announced, then edged up 0.2% Tuesday before Wednesday's jump. Trading volume on Tuesday reached 163.8 million shares, about 34% above the three-month average.
The offering strengthens Intel's balance sheet at a critical point. The company held $29.73 billion in cash and short-term investments at the end of June, and the $20 billion raise equals 67.3% of that total. Equipment vendor ASML advanced 3.8% following the enlarged offering as investors anticipated fab orders.
For shareholders, the dilution means earnings per share must grow faster than the 4.2% increase in share count to maintain value. July CPI data due Wednesday at 8:30 a.m. EDT could shift rate expectations and influence tech valuations.
This article is for informational purposes only and does not constitute investment advice.
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