Intel Corporation (NASDAQ: INTC) has seen a recent surge in its stock price, fueled by speculation that Taiwan Semiconductor Manufacturing Company (NYSE: TSM) may acquire a controlling interest in Intel’s U.S.-based fabrication plants. While this development has captured the attention of the market, Mizuho’s TMT Sector Specialist Jordan Klein believes that the rally is primarily driven by retail and quantitative funds, rather than institutional investors.
Retail and Quant Funds Driving Intel’s Gains
Klein has pointed out that despite Intel’s stock movement, institutional money remains largely absent. He noted that he has yet to encounter any fund managers who are in favor of such a deal or holding significant long positions in Intel. This suggests that retail investors and algorithmic trading models are propelling the current surge, which could lead to a swift sell-off if enthusiasm wanes.
Institutional Investors Skeptical About a TSMC-Intel Deal
According to Klein, many multi-manager hedge fund investors find the idea of TSMC acquiring control over Intel’s U.S. foundries implausible—especially without direct oversight of Intel’s intellectual property. Additionally, there is significant doubt that former President Trump, should he return to office, would approve such a transaction, given its potential national security implications.
Broadcom’s Role and the Future of Intel’s Product Line
In his analysis, Klein also dismissed speculation that Broadcom (NASDAQ: AVGO) could purchase Intel’s product line without a combined TSM-Intel Foundry Services (IFS) collaboration. This view is shared by long-only investors who remain hesitant to bet on Intel’s turnaround potential. Many portfolio managers remain unconvinced about the long-term viability of Intel’s business model, casting further doubt on the sustainability of the stock’s recent gains.
Potential for Further Gains—But at What Cost?
Despite the lack of institutional confidence, Klein acknowledges that should the rumors materialize into an actual deal, Intel’s stock could see significant further upside. However, with institutional investors still sitting on the sidelines, the potential for market volatility remains high. The challenge now is whether analysts can confidently recommend Intel as a long-term investment, given the speculative nature of the current rally.
As investors continue to monitor these developments, the question remains: Is Intel’s stock surge a genuine turnaround story, or just a fleeting moment of market speculation?
