Intel, AMD Equity Giveaways Send Stocks Soaring Despite Dilution

Issuing new shares is usually considered a recipe for souring sentiment as stockholders get diluted. But in this go-go artificial intelligence-crazed market, that logic has been turned upside down.

Just look at Intel Corp. Its shares have soared nearly 90% since the beginning of August as the money-losing chipmaker embarked on $18 billion of stake sales to the US government, SoftBank Group Corp. and Nvidia Corp. The deals are designed to strengthen Intel’s balance sheet with fresh capital.

That new equity also waters down the value of existing stockholders’ stakes by roughly 14%, according to Bloomberg calculations. Intel shareholders could ...