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Intel (INTC) stock soared over 10% on Tuesday after the Japanese conglomerate Softbank (SFTBY) announced a $2 billion investment (about a 2% stake) in the multinational chip manufacturer.
Investors are running into INTC this morning also on President Donald Trump’s administration’s plans of taking a 10% stake in the beleaguered semiconductor firm as well.
Despite ongoing challenges, Intel stock has been a lucrative investment in August. Versus the start of this month, it’s up roughly 35% at the time of writing.
Why SoftBank’s Stake Bodes Wells for Intel Stock
Softbank’s investment is bullish for INTC shares as it essentially is a major vote of confidence in the company’s new management and its turnaround strategy at large.
The announcement reiterates Intel’s pivotal role in revitalizing U.S. semiconductor manufacturing and boosts its overall financial stability in the near term.
The capital injection could help INTC’s foundry business to accelerate its push into next-gen chip technologies, which may help attract new customers over time.
Simply put, Softbank’s stake lifts investor sentiment that may translate to significant further upside for Intel shares over time.
UBS Says INTC Shares Could Soar to $40
According to UBS analysts, a federal stake could prove a major tailwind for INTC stock, especially if the U.S. government urges the likes of Broadcom (AVGO), Nvidia (NVDA), and Apple (AAPL) to boost their business with Intel.
“An upside case could potentially come to fruition if the U.S. government pushes these companies to engage more immediately with Intel on foundry services,” they told clients in a research note on Tuesday.
In fact, Intel could be worth as much as $40 in the bull-case scenario where its chip manufacturing business is valued similarly to global peers, UBS analysts added.
Their best-case forecast indicates potential for another 50% upside in INTC shares from here.
What’s the Consensus Rating on Intel?
At the time of writing, the consensus rating on Intel stock sits at “Hold” only with the mean target of about $23 indicating potential downside of more than 10% from current levels.
However, analysts could upwardly revise their estimates for INTC shares following Softbank and the U.S. government news in the days ahead.
