While the last few days have been brutal for chipmaker Intel (INTC)—and today was no exception at all—there was an unexpected bit of support that might have kept things from getting worse. Nevertheless, Intel was still down over 7% in Monday afternoon’s trading.
The reports came out after Intel’s positively brutal Friday and suggested that the major thing that backstopped Intel from seeing more losses was that it had friends in high places, specifically, the government. In fact, not so long ago, Intel landed a whopping $8.5 billion in grants to get the United States back in the game of making its own semiconductors.
In addition, a report from Mizuho Securities analyst Jordan Klein noted that “…the U.S. government cannot afford to let Intel struggle over the long term.” This is likely the case; any amount of struggle on Intel’s part after getting $8.5 billion from the government suggests that someone made a bad move. With this being an election year, the short-term implications are bad enough, and the long-term ones might be even worse, as Intel is supposed to represent America’s return to the chipmaking market.
Working on Beating the “AI Laggard” Label
Of course, we know that Intel has its fingers in more than a few pies right now. It’s been working on beating the “AI laggard” label it’s been stuck with, and it’s looking to develop a new line of chips that should give it a leg up. But the biggest point that Intel has been focused on lately is its aspirations as a foundry.
The problem with that is that it’s put quite a lot into such operations. Ohio drivers know how much has gone into it; they have been living cheek and jowl with the construction process for weeks, if not months, now. Intel needs a win here, and a pretty big one, to pull it out of the slump it’s been in for a while now. But while chipmaking is important enough for the government to toss billions at it, only time will tell if it can make that translate into long-term revenue streams.
Is Intel a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on three Buys, 23 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. After a 42.87% loss in its share price over the past year, the average INTC price target of $29.56 per share implies 48.92% upside potential.
