INTC's $20B Raise May Hit EPS By 5% — But BofA Says Foundry Gains Could Outweigh Dilution

• BofA believes the potential benefits from scaling Intel Foundry and securing more customers can more than offset the dilution over time.
• The firm reiterated its ‘Buy’ rating on Intel but lowered its price target to $145 from $160.
• BofA said the reduction reflects the estimated EPS dilution from the offering as well as the recent re-rating of AI-compute peers, which has lifted valuation multiples across the sector.

Intel Corp.’s (INTC) $20 billion equity raise could weigh on near-term earnings per share, according to BofA analysts, but the firm sees the move as a sign that management is becoming increasingly confident in its foundry ambitions.

According to TheFly, BofA estimates that the higher share count could dilute Intel’s earnings per share (EPS) by roughly 4%-5%.

Intel shares were up nearly 2% in Wednesday’s pre-market trade.

INTC’s Foundry Conviction Could Outweigh Near-Term Dilution, Says BofA

BofA called Intel’s capital raise a “good leading indicator” of management’s increasing conviction in the foundry business. While the additional shares create a near-term earnings headwind, the analysts believe the potential benefits from scaling Intel Foundry and securing more customers can more than offset the dilution over time.

The firm reiterated its ‘Buy’ rating on Intel but lowered its price target to $145 from $160. BofA said the reduction reflects the estimated EPS dilution from the offering as well as the recent re-rating of AI-compute peers, which has lifted valuation multiples across the sector.

BofA views Intel’s capital raise as a net positive, arguing that greater foundry scale and customer conviction could drive longer-term revenue growth and operational efficiencies.

INTC’s Upsized Offering Oversubscribed By More Than Five Times, Says CEO

Intel CEO Lip-Bu Tan said in a post on X that the company’s upsized $20 billion offering was oversubscribed by more than five times of the chipmaker’s initial goal, which was set at $15 billion.

Intel priced the offering at $95 per share, expecting to receive net proceeds of $19.7 billion. Underwriters will also have a 30-day option to purchase up to an additional $3 billion worth of shares at the offering price, less underwriting discounts.

Intel said customers continue to signal a “strong and sustainable demand environment” amid unprecedented investment in AI compute, pointing to physical AI, purpose-built silicon, advanced packaging and external wafers as key growth opportunities. The company said the proceeds will support these opportunities while maintaining a strong balance sheet and its investment-grade credit rating.

The U.S. government, which held a 9.9% stake prior to this capital raise, is said not to have participated in the offering. However, U.S. Commerce Secretary Howard Lutnick approved the stock offering plan after Intel CEO reached out to him last week.

What Retail Traders Think Of INTC Stock

Retail sentiment on Stocktwits around Intel trended in the ‘bearish’ territory at the time of writing.

INTC stock is up 165% year-to-date and 373% over the past 12 months. The S&P 500 ETF (SPY) is up 21% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 25%.

The iShares Semiconductor ETF (SOXX) is up 120% during this period, while the VanEck Semiconductor ETF (SMH) is up 95%.

Also See: CRWV Revenue Could Surge To Over $100B Eventually As AI Compute Gets Cheaper, Morningstar Says

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