Interesting news came out around chip stock Intel (INTC) today, as it turns out that the Trump deal was not just a means to get Americans some actual value for the big slug of CHIPS Act money it handed over. New reports suggest there was more to the story than first emerged. But the idea did little good for Intel stock, which slid nearly 2.5% in Friday afternoon’s trading.
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The new reports note that the Trump deal was structured in a certain way, one that would actually have given the government access to a bigger stake under certain conditions. There is a five-year warrant included with the agreement that allows the government to buy another 5% of Intel stock at $20 per share. That warrant activates if Intel no longer owns at least 51% of its foundry business.
David Zinsner, Intel’s CFO, noted, “I don’t think there’s a high likelihood that we would take our stake below the 50 per cent, so ultimately I would expect [the warrant] to expire. I think from the government’s perspective, they were aligned with that: they didn’t want to see us take the business and spin it off or sell it to somebody.”
“Fumbled the Football”
And then, in an unexpected twist, Intel fell on its sword and admitted that it had done a less-than-stellar job with its Arrow Lake gaming processors. David Zinsner this time noted that the Core Ultra 200 processors are not a “good offering.” Zinsner also declared that Intel “…kind of fumbled the football on the desktop side.”
Given the rise of competitors in the desktop space, particularly AMD (AMD), this is an important point to address. Intel will need higher-quality processors to get back into that home user space, particularly for gaming. However, Intel has high hopes for Nova Lake to do that job, which Zinsner hopes will “…improve our position next year.”
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 25 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 13.11% rally in its share price over the past year, the average INTC price target of $22.17 per share implies 8.84% downside risk.
