AMD Stock Dips as U.S. Government Invests $5.7B In Rival Chipmaker

Advanced Micro Devices (AMD) stock was down on Friday following an update on the U.S. government’s plan to take a 10% stake in rival chipmaker Intel (INTC). Intel confirmed that it has already received $5.7 billion from the government as part of this deal. There are still more details about this deal that need to be hammered out, with the U.S. Department of Commerce already working on them.

This is a blow to AMD, as the company has surpassed Intel in many performance metrics and has continued to close the gap between the two in terms of market share. Instead of being rewarded for that success, AMD now has to deal with a rival chipmaker that has the backing of the U.S. government. This is despite CEO Lisa Su’s consistent support for bringing chip manufacturing to the U.S.

Intel’s deal with the government was to prevent the sale of its chip fabrication division. There’s also a clause in the agreement that allows the government to buy another 5% stake in Intel at $20 per share. This only triggers if Intel tries to sell more than 49% of its foundry business, and is designed to dissuade it from doing so. That’s another negative for AMD, as it means the government will continue to pump money into Intel to prevent its failure.

AMD Stock Movement Today

AMD stock was down 2.89% on Friday but remained up 34.37% year-to-date. The company’s shares have also rallied 13.48% over the past 12 months. Its progress in the AI server sector has helped lift shares higher, alongside its strategy of undercutting rival graphics processing unit (GPU) maker Nvidia (NVDA) with budget cards.

Is AMD Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for AMD is Moderate Buy, based on 25 Buy and 10 Hold ratings over the past three months. With that comes an average AMD stock price target of $184.74, representing a potential 12.9% upside for the shares.

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