Earlier this week, we got news that chip stock Intel (INTC) CEO Lip-Bu Tan would be meeting with the Trump cabinet in a bid to come up with some ideas to help get Intel back up and running to its fullest. Well, one of those ideas may have surfaced, and it is a doozy. New reports suggest that the United States government may buy a stake in Intel using CHIPS Act money. That news sent Intel shares blasting up, gaining over 4.5% in Friday afternoon’s trading.
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The reports noted that the CHIPS Act money—some of which Intel has already received—may be used to, if only in part, set up an equity stake in Intel. Naturally, this is still very early-stage stuff, and any part of it could change, including all of it. Intel already had access to billions in grants, and an additional $11 billion in loans connected to the CHIPS Act.
And a lot of the CHIPS Act money is currently considered “dormant,” reports note, with the Trump administration eager to get that funding into “…sectors it deems central to national security,” like chip processing. This will undoubtedly be welcome news for Intel, which has been laying off people and closing divisions for the last few months now.
“Essential” For National Security
Meanwhile, word from D.A. Davidson analyst Gil Luria—who has a five-star rating on TipRanks—certainly approves of such a move. Luria noted that, while “we don’t want government to intervene and own private enterprise…this is national security.” Luria further noted, “We can’t rely on somebody else making shell casings for our nuclear arsenal. We have to get it right.”
The idea is reasonable, even if the metaphor is a bit mixed. Still, this might be an interesting start to the notion of a “sovereign wealth fund” that the Trump Administration advanced a while back. And it certainly will give Intel a leg up that needs to happen lest the United States lose ground in chip production altogether.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 14.33% rally in its share price over the past year, the average INTC price target of $22.24 per share implies 10.52% downside risk.
