Big Tech, after years of incinerating vast amounts of cash with share buybacks, is now raking the cash back in with share sales at sky-high prices.
By Wolf Richter for WOLF STREET.
Intel’s shares had spiked by 576% from August last year to the peak of $142 at the end of June, amid the general AI investment mania, though it lost $19 billion in 2024 and 2025 combined, and $14 billion so far this year, for a total of $33 billion in net losses. So now it’s time to sell lots of shares at a very high price, though the price has meanwhile dropped back by 31% to $97.
Intel announced this morning that it priced its big stock offering, and it’s now even bigger, at a lower price, providing even more dilution to stockholders than in my analysis and estimate yesterday, and more cash to Intel, which sorely needs that cash.
This is quite a U-Turn for the former share buyback queen that had incinerated now sorely needed $94 billion in cash on share buybacks between 2008 and 2021.
But it did “buy low” during the buybacks, and it will now “sell high” to investors, though it missed the peak of the share price back in June by 31%. Maybe it was hoping for an even higher peak. But good enough. Kudos to Intel for selling its shares at a still sky-high price. Not sure how that will work out for stockholders, given the dilution taking place here.
Today’s announcement raised its stock offering to $20 billion, up from $15 billion yesterday, plus it raised the 30-day option for underwriters to purchase an additional $3 billion in shares, all at a share price of $95.
In terms of the number of shares it will sell: 210.5 million shares in the public offering, plus up to 31.6 million additional shares to the underwriters for a maximum of 242.1 million shares. If underwriters execute their 30-day option in full to purchase the additional shares, the share sale would raise the share count by 21% from Q2 2025, to 5.29 million (blue segment in the chart). That’s a lot of dilution taking place here.
The chart of shares outstanding shows the effect of the final years of the share buybacks, the declining share count through Q1 2021. Then the share count increased due to the dilutive effects of stock compensation packages and stock-funded acquisitions no longer covered up by share buybacks. In 2025, the share count spiked after Intel sold a 10% stake at much lower prices to the government. And now the estimated effects of today’s stock offering, including the additional allocation to underwriters (blue).
With today’s deal, Intel is joining the other Big Tech companies that, after years of incinerating cash on share buybacks, have now flipped to selling shares at extremely high prices. Makes one wonder what they know that the buyers of those shares don’t.
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Intel is 0.5% of my globally-diversified stock portfolio. So I guess I’m mad about this. But once I divide my anger by 200, it’s not bad.
What do they need the money for?
It lost $33 billion over the past 2.5 years, which ate a gaping hole into its already tight finances. It’s credit rating was downgraded a year ago to just two notches above junk, to BBB with “negative” outlook, meaning further downgrade on the horizon (Fitch).
Intel even mentioned that maintaining its “investment grade” credit rating — not getting downgraded to junk — was one of the reasons for raising the cash. As I reported in my article yesterday, Intel included this:
“The offering is intended to further enable Intel to pursue the growth opportunities ahead while maintaining a strong balance sheet and its commitment to an investment-grade rating.”