Intel (INTC) stock jumped in early trading Monday after Bloomberg reported on a possible multibillion-dollar investment from Apollo Global Management. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

The private equity firm would invest up to $5 billion in Intel, the Bloomberg report said, adding that Intel executives would review the offer. The news came hot on the heels of several reports that the chipmaker was considering a friendly takeover by another chip giant, Qualcomm (QCOM).

Intel shares rose 2% early Monday after rising more than 3% on Friday amid speculation about the Qualcomm deal.

Qualcomm investors were apparently less pleased with the reports of talks with Intel. The chipmaker’s shares fell about 3 percent on Friday and were little changed in early trading on Monday.

Intel and Apollo already have a business relationship. In June, chipmaker Apollo sold an $11 billion stake in its manufacturing facility in Ireland.

The interest in Intel – and the resulting rise in its share price – is welcome news for a technology company struggling in a new market dominated by artificial intelligence. The company is trying to save $10 billion in costs by laying off 15 percent of its workforce and pausing some of its projects in Europe.

Intel shares have fallen nearly 57% since the start of 2024. The company has lagged behind rivals Nvidia (NVDA) and Advanced Micro Devices (AMD), whose advanced AI chips have attracted interest from big tech companies valued at billions of dollars.

And Intel’s Gaudi AI processor hasn’t gained much traction with companies like Amazon (AMZN), Google (GOOG) or Microsoft (MSFT). That’s because it came to market only after the tech giants started working on their own AI chips, Patrick Moorhead, CEO of Moor Insights, said in a recent interview with Yahoo Finance.

A Qualcomm acquisition would be the largest tech merger since Microsoft bought Activision Blizzard for $69 billion. A deal of that magnitude would likely attract unwanted attention from antitrust regulators, whose scrutiny of the tech industry has grown more intense in recent years.

“Similar to other proposed mega-deals that failed to clear high regulatory hurdles, such as NVDA’s offer to acquire ARM Holdings, Broadcom’s offer to acquire Qualcomm and Qualcomm’s attempt to acquire NXP Semiconductor, we believe a Qualcomm/INTC deal would likely not receive regulatory approval,” Stifel analysts wrote in a note to investors on Monday.

Even if successful, some analysts believe that a merger with Qualcomm would not necessarily be good for Intel or its shareholders – and that Intel should withdraw from the chip business altogether.

The story continues

“We continue to believe that Intel should exit the foundry business in the best interests of shareholders, as we believe the company has very little chance of becoming a profitable blue chip company,” Citi analysts wrote in a note on Monday. Intel’s foundry business makes chips for other companies.

Stacy Rasgon, senior analyst at Bernstein, told Yahoo Finance on Monday that it would be “difficult to do a deal where I think the risk justifies the return.”

Qualcomm and Apollo’s interest in Intel comes at a time when the company is also trying to build some momentum of its own. Last week, CEO Pat Gelsinger announced an expanded, multibillion-dollar partnership with Amazon as well as $3 billion in CHIPS Act funding from the U.S. government.

“This news, along with our AWS announcement, demonstrates the continued progress we are making in building a world-class foundry business,” Gelsinger said in the announcement last Wednesday.

Laura Bratton is a reporter for Yahoo Finance.

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