Still betting on Nvidia? Our AI picked this stock instead; it’s up 96%+ THIS MONTH
Investing.com - Intel (NASDAQ:INTC), a prominent player in the semiconductor industry with a market capitalization of $110.34 billion, has finalized a deal giving the U.S. government a stake in the company in exchange for $8.9 billion in CHIPS Act funding, according to Bernstein SocGen Group, which reiterated its Market Perform rating and $21.00 price target. According to InvestingPro data, the stock is currently trading near its Fair Value level.
The agreement with the Trump administration will result in U.S. taxpayers owning 433.3 million new Intel shares at $20.47 each, representing a 17% discount to Friday’s closing price. This follows a separate announcement that SoftBank will take a $2 billion stake, purchasing approximately 87 million shares at $23 each. The stock has shown strong momentum, with InvestingPro data indicating a positive return of over 20% in the past year.
Intel will issue approximately 520 million new shares at an average price of $20.89, increasing its share count by about 12%. After the issuance, existing shareholders will own approximately 89.4% of the company, with the federal government owning 8.8% and SoftBank owning 1.8%.
The U.S. government will become Intel’s largest shareholder following the transaction. The dilution for existing shareholders amounts to nearly 11% of their ownership stake.
Bernstein SocGen Group maintains that Intel shares "feel like a tough short given this kind of newsflow in the short term, but the structural issues still feel massive keeping us away from the long side." With Intel’s next earnings report due in approximately 59 days, investors seeking deeper insights can access comprehensive analysis and more than 30 additional key metrics through InvestingPro’s detailed research reports.
In other recent news, Intel Corporation has announced that the U.S. government will purchase a 9.9% stake in the company for $8.9 billion. The agreement involves the acquisition of 433.3 million primary shares at $20.47 each, funded by $5.7 billion from previously awarded CHIPS Act grants and $3.2 billion from the Secure Enclave program. President Donald Trump has praised the deal, claiming it cost the U.S. government nothing while being valued at approximately $11 billion. In addition, Intel is in talks with major investors to secure an equity infusion at a discounted rate, following a $2 billion investment from SoftBank. Analyst firms TD Cowen and Truist Securities have both reiterated their Hold ratings on Intel, setting price targets at $20 and $21, respectively. TD Cowen views the U.S. government’s investment and Intel’s political positioning as positive factors. However, Truist Securities notes that Intel’s challenges extend beyond financial issues. These developments highlight significant recent changes for the company as it navigates its current financial landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.