Intel Adding $1B To CapEx To Boost Production

Intel Corporation INTC stock gained 3 percent Friday after the company said it's aggressively investing to beef up its production.

What Happened?

In a website post, Intel said it's adding another $1 billion to its 2018 capex in order to hit its full year revenue guidance and meet market demands for its chips.

“We continue to believe we will have at least the supply to meet the full-year revenue outlook we announced in July, which was $4.5 billion higher than our January expectations,” Intel said in the release.

Why It’s Important

Several Wall Street analysts had predicted Intel competitor Advanced Micro Devices, Inc. AMD would be able to take advantage of an intel production shortfall and gain market share by picking up Intel’s slack. AMD stock tripled on optimism about Intel’s struggles, but Friday’s news sent shares of AMD down more than 5 percent.

Semiconductor stock NVIDIA Corporation NVDA gained 4.8 percent on the day. The move was likely partly in reaction to Intel’s bullish commentary on robust demand in the PC market. Friday’s gains may also have been attributed to Evercore ISI raising its price target on Nvidia to a Street-high $400.

What’s Next?

All investor eyes will be on Intel to see whether its heavy investments will pay off and help it meet robust market demand. Investors will also be watching to see how much of an impact an extra $1 billion in spending will have on margins.

In the longer-term, semiconductor investors will be watching to see when Intel gets its 10nm chip production up and running and how much (if any) market share is ultimately loses to AMD.

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