Why Intel Rallied Today

Key Points

• Intel announced the closing of its sale of 51% of Altera to Silver Lake today.

• As a result, Intel lowered its operating expense outlook for the year.

• The removal of the struggling unit from the company's books should boost cash without a significant hit to profits.

• 10 stocks we like better than Intel ›

Shares of Intel (NASDAQ: INTC) rallied on Monday, rising as much as 5.7% before retreating to a 3.8% gain as of 12:08 p.m. ET.

Intel has been a controversial turnaround play in the semiconductor industry for a few years, and is currently pinning its hopes on the strategy of new CEO Lip-Bu Tan, who was hired in March.

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Today, Intel disclosed some mildly positive news on the cost-cutting front. Given its low valuation, it only took that much to have significant outperformance.

Tan continues to cut costs

In a press release issued today, Intel announced it had closed the sale of its field programmable gate array (FPGA) Altera unit to private equity firm Silver Lake. Silver Lake now owns 51% of Altera, having paid Intel $3.3 billion for that stake.

Not only will the transaction boost Intel's balance sheet as Tan focuses the company on its gore CPU, GPU, and foundry businesses, but the transaction will also allow Intel to de-consolidate Altera's results from its income statement. While that means Intel's revenue and profits will take a hit, it also means Intel will be free of recording Altera's overhead costs.

As such, Intel announced that it now expects adjusted (non-GAAP) operating costs to come in at $16.8 billion this year. That's $0.2 billion lower than previously guided. Meanwhile, the release also maintained an even lower $16 billion in planned adjusted operating expenses for 2026.

Image source: Getty Images.

A mildly positive step

Of course, Intel can't just cut its way to prosperity; the company will also have to grow revenue and profits by designing better chips and attracting customers to its foundry. Still, the move today shows just how much the stock may positively react to any good news, given Intel's beaten-down valuation, with a highly negative narrative that has been hanging over the stock ever since mid-2024.

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Billy Duberstein and/or his clients have positions in Intel. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.