Intel Shares Skyrocket After Landing Jaw-Dropping Multibillion Dollar Deal With Amazon!

Intel Corp (NASDAQ:INTC) shares are on the rise in early trading on Tuesday, after the company made a monumental announcement regarding a multi-billion-dollar deal with Amazon.com Inc's (NASDAQ:AMZN) cloud unit, Amazon Web Services (AWS). This development comes as a welcome boost to Intel's prospects, as the company also received a sizeable U.S. semiconductor grant.

This latest news has analysts weighing in on the potential implications for the company's future. BofA Securities analyst Vivek Arya has responded to the developments, reiterating an Underperform rating and a price target of $21.

According to Arya, the deal between Intel and AWS involves a collaboration on a custom AI fabric chip and a custom Xeon server CPU chip. Furthermore, the U.S. government has agreed to provide funding of $3 billion for the production of government chips.

While this news may seem groundbreaking at first glance, Arya argues that it may not be as significant as initially thought. The analyst notes that Intel has already been supplying AWS with CPUs for quite some time, so customization of these chips is not an entirely new concept. Additionally, the impact of the AI fabric win on the 18A project may only become apparent from CY26.

Arya also pointed out that Intel faces stiff competition from other major players in the industry, such as Broadcom Inc (NASDAQ:AVGO). The company's Ethernet switch incumbency presents a major challenge for Intel, as it seeks to position itself as a leading-edge manufacturing entity.

Despite these challenges, the deal with AWS serves as a much-needed injection of confidence for Intel. As the company looks to expand its capabilities and compete in the increasingly crowded tech industry, securing high-profile partnerships like this one will be crucial to its success.

The U.S. semiconductor grant of $3 billion is also a major coup for Intel, providing the necessary funding for the production of government chips. This development is likely to boost Intel's prospects, as the company seeks to further establish itself in the global tech landscape.

As the news of the deal and the grant continues to shake the markets, analysts will be keeping a close eye on Intel's future prospects. With significant challenges still on the horizon, the company will need to navigate the complex tech landscape with caution and strategic planning.

Only time will tell if the collaboration with AWS and the U.S. semiconductor grant will be enough to propel Intel to the forefront of the industry. However, for now, the company is enjoying the boost provided by this latest news, as its shares skyrocket in early trading.