Why Intel, Alphabet and Mobileye stocks all soared today

Thursday seems to be a good day for stocks, especially technology stocks – especially technology stocks related to autonomous cars. If you own shares of Mobileye (MBLY -7.90%) or alphabet (GOOG 0.30%) (GOOGL 0.32%) today you have Intel (INTC 5.06%) to thank for that.

Oh, sure. A lot of the stocks that are up today are because of the Federal Reserve's 50 basis point rate cut. That's a big catalyst. But a second catalyst, and one specific to the self-driving car industry, is the fact that Intel announced today that it has no plans to sell its majority stake in Mobileye.

This news is the reason for the surprising strength of Intel shares (up 3% by 11:10 a.m. ET), Alphabet shares (up 1.8%) and, most importantly, Mobileye shares, up 15.3%!

What Intel says about Mobileye

Earlier this month, both Intel and Mobileye were rocked by rumors that the semiconductor giant was planning to sell most of its 88 percent stake in Mobileye, which makes machine vision systems for electric cars.

Today, Intel said the opposite is more likely to be true. “We believe in the future of autonomous driving technology and in Mobileye's unique role as a leader in the development and delivery of advanced driver assistance systems,” Reuters quoted the tech giant as saying. And assuming Intel is telling the truth, that means the company sees value in owning a piece of the self-driving car industry.

That's good news for Mobileye investors, who no longer have to worry about a flood of their shares being sold off, sending the stock price down even more than it has already fallen this year (73%). It's also likely to be good news for Alphabet, which in July announced plans to invest another $5 billion in its Waymo self-driving car project – even as it reported that Waymo had cost it $1.1 billion in losses in the second quarter.

And if Intel makes the right decision by keeping Mobileye, it could even be good news for the company.

Is Mobileye stock a buy?

Intel could of course Really It could use some good news right now, after reporting declining revenue and a net loss of $1.6 billion (and cash burn of $3.4 billion) in its Q2 report. With less than a billion dollars in profit over the last 12 months to support its $89 billion market cap, Intel's hope that Mobileye, which is also unprofitable but generates free cash flow, will turn into a profit center in the future is a bet that had better pay off.

The good news is: It can be.

Analysts surveyed by S&P Global Market Intelligence expect Mobileye to report earnings under generally accepted accounting principles (GAAP) in 2026 at the earliest. However, the self-driving car division already generates significant free cash flow. Cash profits of $435 million are expected next year. With a market cap of $9.4 billion, that doesn't exactly make Mobileye stock “cheap.” But a price-to-free cash flow ratio of 22 is not an unrealistic valuation. And with free cash flow expected to triple in the three years after 2025, Mobileye actually looks like an asset Intel should hold onto.

If you're looking for a good stock to invest in the self-driving car revolution, then Mobileye stock could be right for you.