Key Takeaways
- Intel agreed to buy quantum software company Classiq in a deal reportedly worth $2.3 billion, three days before its third-quarter report on Thursday, Oct. 29.
- Intel’s August share sale raised more than $20 billion, which gives it room to fund this year’s spending without going back to the debt or equity markets.
- Capex ran above cash from operations every year from 2022 through 2025, and total debt rose from $38.2 billion at the end of 2021 to $47.1 billion at the end of 2025.
- The number to watch is Intel’s 2027 capex plan: analysts expect $26.0 billion of capex and negative free cash flow of $1.4 billion that year.
Intel (INTC) agreed on Monday to buy quantum software company Classiq, in a deal Bloomberg reported is worth about $2.3 billion. Intel didn’t give a price, but CEO Lip-Bu Tan said in its announcement: “Joining forces with Classiq transforms Intel’s Quantum Computing Group into a full-stack quantum computing business.”
That’s the second sign in a week that Intel is spending again. Ian King said on last week’s Bloomberg Tech podcast that Intel’s latest factory updates were “Intel saying we’re starting spending money again.” In Ohio, King noted, Intel built the concrete slabs, stopped, and is now putting the roof on.
So when Intel reports third-quarter results on Thursday, Oct. 29, after the close, the big question is whether its own cash flow can pay for all of it.
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The last build-out didn’t pay for itself
Intel has been here before. Cash from operations fell from $29.5 billion in 2021 to $9.7 billion in 2025. Capex ran above it every year from 2022 on, and peaked at $25.8 billion in 2023.
That added up to $44.3 billion of negative free cash flow from 2022 through 2025.
Intel filled the hole with borrowing, government money and new stock. Total debt rose from $38.2 billion at the end of 2021 to $47.1 billion at the end of 2025. Cash jumped in 2025 after Intel sold stock to the U.S. government, SoftBank and NVIDIA, and Washington sped up $5.7 billion of CHIPS Act funding.
And by June 27, 2026, total debt was back up to $50.5 billion.
This time, the money’s already in the bank
The difference now is that Intel raised the money before the spending restarted. It held $29.7 billion of cash and short-term investments on June 27. Then in August it raised more than $20 billion selling new shares at $95 apiece.
Analysts don’t expect much of a hole, either. TIKR’s consensus has free cash flow at negative $1.2 billion in 2026 and negative $1.4 billion in 2027, then turning to $5.0 billion of inflow in 2028.
And Classiq is a small check next to all that. Even if Intel pays entirely in cash, $2.3 billion is about a tenth of the more than $20 billion Intel plans to spend on capex this year. The deal isn’t expected to close until the first half of 2027.
That timing matters, because outside money may be getting harder to find. On Monday’s Mad Money, CNBC’s Jim Cramer listed Intel’s raise among this year’s flood of big stock sales, then warned: “I think both the debt and the equity markets are running out of money. I think they’re sated.”
If he’s right, Intel got its money in early.
Thursday’s real test is 2027
Intel has said 2026 capex will top $20 billion and that 2027’s will be significantly higher. Analysts expect $26.0 billion for 2027. A plan well above that would push free cash flow deeper into the red just as the Classiq bill comes due. CFO David Zinsner said in July that Intel needed another quarter or two to settle on the number, so it may not come on Thursday.
The other thing to watch is how Intel would cover any gap. Another share sale would add to a share count that’s already grown fast: diluted shares averaged 5.10 billion in the second quarter, up from 4.37 billion a year earlier.
The stock may not trade on cash flow this week at all. It has run this year on the server CPU shortage, which New Street Research argued on Monday will last for years. A strong revenue guide could lift the shares however much the build-out costs.
My take: Intel has already paid for this year’s spending, so Cramer’s dry markets aren’t its problem yet. The test is whether operating cash flow grows fast enough to cover 2027’s bigger plan without another trip to shareholders.
Of course, Intel may hold back the 2027 figure until early next year, and then Thursday only narrows the question.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
