The Government Is Taking a 10% Stake in Intel. How Should You Play INTC Stock Here?

Intel (INTC) stock has been ripping higher ever since President Donald Trump’s administration confirmed a 10% stake in the semiconductor firm that’s finding it increasingly difficult to stay relevant in the AI era. 

Still, a senior Bernstein analyst, Stacy Rasgon, is not entirely convinced that federal support means an all-encompassing answer to INTC’s problems in 2025. 

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Intel shares have rallied more than 30% in August but remain down some 9% versus their year-to-date high set in February. 

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Why Recent Surge in Intel Stock May Be Premature

A durable recovery in INTC shares require three key ingredients: money, customers, and credibility, but the recently disclosed government lifeline helps with the first only.   

“Intel needs money to build capacity, but it needs customers to fill that capacity, and for customers, it needs capability,” the Bernstein analyst argued in a recent interview with CNBC. 

According to him, there isn’t much the government can do to help Intel attract commercial clients, which he believes are paramount for its foundry business to take off. 

Simply put, the Intel stock price surge following news of government support may be premature. 

Government Lifeline Dilutes Existing INTC Shareholders

Intel’s foundry business lost $13 billion in 2024 – and the semiconductor firm is broadly expected to take another two to three years to ramp its advanced 14A process nodes. 

According to the Bernstein analyst, the company must prove that it’s capable of “making parts that meet specs, are available on time, and have good cost structure” before businesses start signing up as customers.

What’s also worth mentioning is that INTC’s total number of shares outstanding will increase by roughly 12% due to the government’s equity stake, which means significant dilution for existing shareholders. 

Wall Street Currently Rates INTC Stock at ‘Hold’ Only

Note that other Wall Street firms also recommend caution in buying Intel stock at current levels. 

According to Barchart, the consensus rating on INTC shares currently sits at “Hold” only with the mean target of about $23 indicating potential downside of as much as 8% from here. 

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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.