Intel Jumps As Trump Explores Investment In Bid To Revive US Chip Ambitions
Jim Cramer said Intel's weak balance sheet makes a potential government stake critical to finishing projects that former CEO Pat Gelsinger couldn't fund.
Tim Seymour of Seymour Asset Management warned that nationalizing a company is 'not conventional' and has historically sparked sell-offs, but acknowledged the political and strategic backdrop behind Trump's potential investment in Intel's long-delayed Ohio fab.Intel shares rose in after-hours trading Monday after President Donald Trump softened his stance following a White House meeting with CEO Lip-Bu Tan, whom he had urged to resign last week over alleged China ties.
Cramer had earlier criticized Intel's $18.8 billion foundry loss in 2024 despite $8.5 billion in U.S. subsidies, questioning the viability of domestic chipmaking and warning investors to sell the stock as Advanced Micro Devices (NASDAQ:AMD) and Qualcomm (NASDAQ:QCOM) gain ground.
Intel's 18A process has hit yield issues, threatening its ability to profitably produce advanced chips and undermining efforts to close the gap with Taiwan Semiconductor Manufacturing Co (NYSE:TSM).
The setback comes as rivals gain ground, while Intel faces internal headwinds, including multiple senior executive departures, a workforce reduction targeting thousands of positions, and the delay of its long-touted Ohio fab project into the 2030s.
Fitch downgraded Intel's credit rating, citing uncertain profitability in its foundry pivot, operational turbulence from leadership instability, and the mounting impact of missed timelines.
Intel stock gained 23% year-to-date, topping the NASDAQ 100 Index's over 13% returns. Intel stock dropped over 9% after second-quarter results showed a revenue beat on tariff-related pull-ins but weak margins and cautious guidance. Management forecasts that the third-quarter revenue will be $13.1B, above consensus, but the gross margin guidance of 36% lagged expectations.
Analysts flagged persistent competitive pressure from AMD and Arm (NASDAQ:ARM), Intel's lack of an AI pipeline, and a capex-heavy manufacturing model. Benchmark warned Intel may need years to improve design and manufacturing competitiveness. At the same time, Bank of America Securities, Rosenblatt, and Needham said the turnaround remains slow despite stronger-than-expected first-half sales.
Price Action: INTC stock is trading higher by 2.89% to $24.55 at last check Friday.
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