Intel to Sell $15 Billion in Stock After AI Boosts Demand

**Carol Massar** (0:02)
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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:32)
I'm looking up shares of Intel. Nora, congratulations on owning this stock as a US taxpayer.

**SPEAKER_3** (0:38)
I mean, I guess we all do.

**Tim Stenovec** (0:39)
I guess we all do. Shares down about 3% today. The company plans to offer $15 billion worth of new stock. It could be its first public share sale since the company listed all the way back in 1971 It's a bid to extend its comeback and capitalize on the AI boom. Ian King is Bloomberg News, US Semiconductor Reporter. He joins us from our San Francisco Bureau. Ian, I want to just cut right to this.
Big deal? Not a big deal?

**Ian King** (1:07)
I mean, it's a big deal in terms of Intel's recovery. Obviously, if you're an existing shareholder, you're not too keen about being diluted.

**Carol Massar** (1:14)
Well, we all are, I guess, Ian.

**Ian King** (1:16)
Yeah, exactly. On the flip side of this, though, Intel is really doing what other large technology companies have already done, which is say, look at these incredible valuations we're enjoying. Maybe we can take some money out of the equity market, and that will protect us on the other side of the balance sheet when I'm basically not endanger our debt ratings and not really stretch that balance sheet with too much more debt in order to fund what we're trying to do going forward.

**Tim Stenovec** (1:47)
Okay. I'm so glad you brought this up because that's the part of the balance sheet that I want to talk to you about. In a time when we're talking about Alphabet raising $25 billion by tapping the debt market, also some of the Mag 7 doing share sales too.
What is it about Intel's balance sheet and its debt that load right now that sort of makes it make sense to do an equity sale rather than tap the debt market?

**Ian King** (2:13)
Yeah, no, I mean, that's for Intel in particular, that's an extremely important question. You'll remember under its previous CEO spent like a drunken sailor basically building all of these new factories, trying to get into the AI race, trying to become a chipmaker for everybody in the manufacturing side, bets that didn't really pay off that had to be kind of reigned in by the current CEO, Lut-Bhutan, who made it his kind of first order of business to clean up that balance sheet. And he's done some work on that. They've still got a lot of debt, but they have a lot more cash than they used to now. So there's some more strategic freedom coming in there.
And really what, with this equity raise, what he's doing is creating more strategic freedom without kind of going back on that promise to clean up the finances.

**SPEAKER_3** (3:00)
I mean, this is a stock that hit a high of $141 just back in June. Now we're seeing the stock sitting at about $98 a share, but it's also been on a tear up of about 167% year to date. But talk to me a bit about some of the pressures that this company has been facing if we're not looking at that large year to date gain.

**Ian King** (3:22)
Yeah, knowing that the pressures it's facing still exist, right? None of them have gone away. It's got a little bit of a windfall from this AI boom because some of its generalist chips, CPUs have become part of the story. But it really hasn't done anything in terms of differentiating itself, coming out with new products that are really kicking a hole in the ceiling and causing disruptions in the market. It's not really taking market share from Nvidia or AMD as of yet. It's just had a windfall.
That gives it, I think, a little bit more latitude to get in the game. The other thing it's trying to do is to find outside users for this factory network that it has built because it can't fill them itself, has to build more capacity, has to be ready at a moment's notice to be able to build out capacity to help them and help itself to an extent. So a lot of the challenges, the fundamentals are still really in place and they really have to be sorted out going forward. And cash helps, right?

**Tim Stenovec** (4:22)