Intel has been left behind by the AI revolution, says Jim Cramer

Key Concepts:

• Two Economies: A strong AI-driven economy vs. a weak consumer-driven economy.
• Averages Masking Weakness: The Dow and Nasdaq averages obscure the struggling consumer economy.
• Intel's Funding Needs: Intel seeking funding from Apple to re-enter the AI race.
• Apple's Investment Commitment: Apple's $600 billion investment pledge in the US.

Two Diverging Economies

Jim Cramer highlights the existence of two distinct economies within the US. One is a "tremendous economy with amazing growth" fueled by artificial intelligence (AI). The other is an "anemic economy connected to the consumer which seems to deteriorate by the day." This stark contrast is not readily apparent when looking at broad market averages.

The Masking Effect of Averages

Cramer argues that market averages like the Dow Jones Industrial Average (down 170 points, losing 0.50%) and the Nasdaq (slipping 0.5%) "mask" the weakness in the consumer economy. The overall strength of the AI-driven sector inflates these averages, making it harder to discern the struggles faced by consumer-facing businesses. The "economy just takes up too much weight in the averages."

Intel's Potential Funding from Apple

The discussion then shifts to Intel, described as a "once great semiconductor company that's been left behind by the AI revolution." Intel reportedly needs funding to "get back in the game." Instead of turning to a traditional bank, Intel is rumored to be seeking funds from Apple.

Unconfirmed Rumor and Rationale

Cramer emphasizes that this potential deal is unconfirmed, stating, "there's been no confirmation from either side" and that he has been trying to confirm it for 48 hours. However, he finds it "natural to think that a distressed tech company like Intel would be seeking funds from Apple."

Apple's Financial Power and US Investment

The rationale behind this potential partnership lies in Apple's immense wealth and its commitment to investing $600 billion in the United States. Cramer poses the question, "So why wouldn't some of that go to Intel if it asked Apple?" He suggests that Apple could potentially "sub for the US government" in funding Intel's ambitious plans, referencing the "pie in the sky stuff that former CEO Pat Gelsinger wanted to."

Conclusion

The main takeaway is the existence of two separate economic realities: a booming AI sector and a struggling consumer sector. Market averages obscure this divergence. The potential for Apple to fund Intel highlights the significant financial power concentrated in leading tech companies and their potential role in shaping the future of the US economy.