Intel Corporation INTC is planning to spin off its venture capital business, Intel Capital, into a standalone entity to enable greater autonomy from the parent company. The move is also intended to attract external capital and align Intel Capital’s corporate structure with that of other venture firms worldwide. The separation is likely to happen in the second half of 2025, and the new entity will start operating under a new name.
With more than $5 billion in assets under management, Intel Capital is one of the world’s leading corporate venture investors, deploying more than $20 billion in capital through investments in more than 1,800 companies. Intel will remain the anchor investor in the spun-off firm, while the existing Intel Capital team will move to the new company.
INTC Narrowing Focus & Freeing Up Capital?
Intel shares have plunged 59.2% over the past year against the industry’s growth of 97.8%. Much of this underperformance is perceived to be the result of severe financial difficulties and operational challenges.
With the appointment of David Zinsner and Michelle Johnston Holthaus as the interim Co-CEOs in place of Pat Gelsinger, the company is gearing up to take decisive actions. Management is also undertaking a comprehensive review of its businesses and is reportedly mulling various options, including the potential split of its product design and manufacturing divisions. It plans to establish Intel Foundry as an independent subsidiary to unlock strategic benefits and improve capital efficiency with clearer separation and independence from the rest of Intel. The division incurred an operating loss of $5.8 billion in the last reported quarter.
Intel Capital’s spin-off is probably another initiative to focus on core operations and free up capital to fuel growth. While most of Intel’s competitors evolved with the changing demand patterns, it hung on to its legacy products and fell behind in the race. For example, despite making significant inroads in AI (artificial intelligence) chips, Intel lagged NVIDIA Corporation NVDA on the innovation front, with the latter’s H100 and Blackwell graphics processing units (GPUs) being runaway successes. Leading technology companies are reportedly piling up NVIDIA’s GPUs to build clusters of computers for their AI work, leading to exponential revenue growth, while Intel is playing a catch-up game.
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Moving Forward
Intel's innovative AI solutions hold immense promise for the broader semiconductor ecosystem. By addressing the challenges of scalability, performance and interoperability, it is paving the way for widespread AI adoption across enterprises worldwide. It remains to be seen whether the separation of Intel Capital can further help the company attract fresh capital for more innovative products to rejuvenate its sagging shares.
INTC’s Zacks Rank
Intel currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
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