Intel gains for third straight session on Amazon partnership


  • Intel stock rises 7% on Tuesday after CEO announces new partnership with Amazon.
  • Intel will help to design and fabricate AI chips for AWS data centers.
  • The deal is said to be multiyear and in the billions of dollars.
  • Intel will postpone construction of fabrication plants in Poland and Germany.

Intel (INTC) is really having a moment. On Monday, Intel stock garnered a 6.4% advance on the back of $3 billion in funding via the Secure Enclave program of the US Department of Defense.

On Tuesday, INTC shares have risen 7% after it emerged that Amazon (AMZN) had chosen Intel’s foundry unit to produce a new suite of custom artificial intelligence (AI) chips for its Amazon Web Services (AWS) cloud computing business.

In a note to employees, CEO Pat Gelsinger called the deal a multi-billion dollar partnership for chip design and fabrication services.

The Dow Jones Industrial Average (DJIA), of which Intel is the smallest member, opened 0.3% higher on Tuesday before pulling lower. The performance was behind the S&P 500, 0.4%, and the NASDAQ Composite, 0.6%, but represented a new all-time high for the index.

The market begins Tuesday on a chummy note after US Retail Sales for August rose 0.1% MoM, whereas -0.2% has been expected. The print shows that a recession isn’t imminent but also isn’t high enough to scare Fed governors away from cutting 50 basis points from the fed funds rate on Wednesday, as many now expect.

Intel stock news

Amazon’s AWS unit has been experimenting with designing its own data center chips over the past few years and is now putting several of them into use. Intel already produces Xeon Scalable processors for AWS and now will also make custom Xeon 6 chips using the Intel 3 node.

The new partnership will see Intel utilizing its 18A process to create an "artificial intelligence fabric chip" for AWS in partnership with both company’s chip designers. Next, Gelsinger told employees that Intel would use its 18AP and 14A manufacturing processes to aid AWS in further chip projects.

This Amazon partnership follow’s Monday’s news that an additional $3 billion will be allotted to Intel for a secure manufacturing program wherein Intel will focus on chip design and fabrication related to US military products. Though the funding also comes from the CHIPS & Science Act of 2022, this $3 billion stands outside of the $8.5 billion already set aside for Intel’s foundry investments.

Gelsinger also said he would postpone foundry investments in Poland and Germany.

In a Reuters report on Tuesday, German Chancellor Olaf Scholz said that Intel will “stick with it” in regard to its proposed $33 billion fabrication plant in Magdeburg, even though Intel has decided to postpone construction for two years while it gets its house in order.

KeyBanc Capital Markets analyst John Vinh said he was “encouraged” by the announcements since it shows that management is being aggressive in terms of cost control.

Intel stock forecast

Intel stock is rising for its third consecutive session. It's hard to say whether this rally has legs, since all the gains have been news-related. Either way, bulls are now staring at the $24.90 level as a possible endpoint. That level showed support on separate occasions in late 2022 and early 2023. A break above here would also sent INTC above the 50-day Simple Moving Average (SMA) for the first time since late July.

One good sign, however, is that INTC stock broke above other recent range highs on August 2 and August 30, so it is showing that a short-term rally is clearly here for now.

INTC daily stock chart

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

Australian Dollar appreciates despite stronger US Dollar, PMI awaited

Australian Dollar appreciates despite stronger US Dollar, PMI awaited

The Australian Dollar (AUD) continues to strengthen against the US Dollar (USD) following the release of mixed Judo Bank Purchasing Managers' Index (PMI) data from Australia on Friday. The AUD also benefits from a hawkish outlook by the Reserve Bank of Australia (RBA) regarding future interest rate decisions. 

AUD/USD News
Japanese Yen remains on the front foot against USD, bulls seem non-committed

Japanese Yen remains on the front foot against USD, bulls seem non-committed

The Japanese Yen (JPY) attracts some buyers for the second straight day on Friday amid reviving bets for more interest rate hikes by the Bank of Japan (BoJ), though it lacks any follow-through.

USD/JPY News
Gold advances to near two-week high, eyes $2,700 on geopolitical tensions

Gold advances to near two-week high, eyes $2,700 on geopolitical tensions

Gold price (XAU/USD) prolongs its uptrend for the fifth consecutive day on Friday and climbs to a nearly two-week top, around the $2,690-2,691 area during the Asian session. Intensifying Russia-Ukraine tensions force investors to take refuge in traditional safe-haven assets and turn out to be a key factor underpinning the precious metal.

Gold News
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time. 

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures