Intel scored a new deal with Amazon.
After hanging on the ropes for much of August and September, Intel (INTC 3.93%) is suddenly having a banner week.
The stock jumped yesterday after the company secured $3 billion in funding from the CHIPS Act, and today it’s climbing again after it announced a new partnership with Amazon (AMZN 1.08%).
At 12:23 p.m. ET, the stock was up 4.4% on the news. Investors see it as a sign that the company is reinventing itself after announcing a massive restructuring in its second-quarter earnings report.
Image source: Getty Images.
What’s happening with Intel and Amazon
After the market closed yesterday, Intel said it was expanding its strategic collaboration with Amazon Web Services, announcing a multiyear, multibillion-dollar partnership for Intel to produce custom chips for Amazon, including an artificial intelligence (AI) fabric chip and a Xeon 6 chip designed to handle computing-intensive AI workloads.
The news gives Intel’s foundry business a much-needed win. It’s been losing billions of dollars a year and has fallen behind rivals like Taiwan Semiconductor.
The AI fabric chip will use Intel’s 18A process, which makes nodes as small as 18 angstroms (1.8 nanometers).
What it means for Intel
Coming directly on the heels of the CHIPS news, the expanded partnership with Amazon is another significant win for Intel Foundry.
However, investors shouldn’t get carried with Intel’s rally. The company still needs to execute and do so in a timely, cost-efficient manner, which has been a problem for it in the past.
Intel certainly isn’t going away, and a vast ecosystem depends on and supports its chip design and foundry businesses, but a turnaround will take a lot more than back-to-back favorable announcements.
Keep your eye on its next earnings report, due out around the end of October. While the numbers will likely be ugly, the company could give some insights into the progress it’s making in revamping the business.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.