Why Intel Corporation Gained 12% in October

By Anders BylundFool.com

INTC data by YCharts

What: Shares of Intel gained 12.3% in October, according to data from S&P Capital IQ.

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So what: Intel's stock is always swimming through a ton of market-moving noise, and October was no exception. The semiconductor giant started the month on a strong note, rising 10% on nothing more than PC market reports and a lack of economy-related panic in China.

Intel reported third-quarter results without moving share prices very far.

Then, on October 19, Intel boosted fertility and adoption benefits for its 167,000 workers, and also said it would spend $5.5 billion to turn a Chinese processor factory into a memory chip facility.

These moves unlocked a quick 4% gain over the next two days. In my neck of the woods, we call that a difference-maker.

Now what: It's hard to say which one of those mid-month moves carried the most market-moving power. So let's consider them together.

The common denominator here works out to management having a high level of confidence in Intel's current and upcoming business prospects. You don't make a $5.5 billion capital investment on a whim, even if you have $21 billion of cash on the balance sheet. And you don't quadruple a worker benefit if you don't need them to stick around.

The memory-plant upgrade could make Intel a serious supplier of NAND flash-memory chips, churning out as much as 7% of the global NAND supply. However, Intel is also a longtime partner with memory expert Micron Technology , and might simply use the Chinese factory under the banner of its Micron joint venture.

Either way, the immediate takeaway remains: Intel is not afraid to spend a few billion right now if it helps the company stay relevant for the long haul. October's market-beating gain was a vote of confidence from investors and management alike.

The article Why Intel Corporation Gained 12% in October originally appeared on Fool.com.

Anders Bylund owns shares of Intel and Micron Technology. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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