We’re buying more of an AI stock that’s under pressure to start the week
We are buying 100 shares of Intel at roughly $97.98. Following the trade, Jim Cramer’s Charitable Trust will own 1,400 shares of INTC, increasing its weighting to 3.3% from 3.1%. Intel shares are down roughly 4% after the chipmaker announced it will sell $15 billion in stock, with an option to sell an additional $2.25 billion shares. Selling equity does dilute existing shareholders, reducing our respective claims to future earnings, so it’s not uncommon to see a company’s share price decline on these announcements. But, ultimately, we believe Intel is doing this from a position of relative strength. We talked with Jim after the Morning Meeting. He said, “Everyone knew” Intel would need to sell stock eventually to fund its foundry buildout, and he argued it’s sensible to do the raise sooner rather than later. “Get it behind us,” he said. With this overhang resolving itself, Jim wants to buy shares now and leave room to pick up more. Unlike Alphabet’s historic $85 billion equity capital raise in June, this did not come out of the blue. On Intel’s second quarter earnings call, CFO David Zinsner touted the company’s strong liquidity position, but acknowledged that it may need to “tap the capital markets” to drive more investment in its business to meet demand signals. Management also raised its capex outlook to more than $20 billion for this year and said it expects 2027 capex to be “significantly above” 2026 levels. In the press release announcing the equity offering, Intel said now is the time because “customers continue to signal a strong and sustainable demand environment, driven by unprecedented investment in AI compute. Progress in emerging areas including physical AI, purpose-built silicon, advanced packaging and external wafers represent significant growth opportunities for Intel.” We suspect Intel would not be investing so aggressively if it was not confident the demand was there. We suspect these funds will support its next-generation 14A manufacturing process and advanced packaging solutions (Jim Cramer’s Charitable Trust is long INTC and GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
