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What’s next for Intel stock as US earmarks $3.5 billion investment

What’s next for Intel stock as US earmarks $3.5 billion investment

In recent years, there has been a steady rise in the importance of the semiconductor industry and a steady rise in the size of companies operating in the sector. The trend became particularly evident after the start of the ongoing artificial intelligence (AI) boom in late 2022 and no company is more emblematic of the growth than Nvidia (NASDAQ: NVDA).

Still, not all firms have managed to fully leverage the current industry environment. While NVDA and Advanced Micro Devices (NASDAQ: AMD) saw a 2024 stock market rise of 84.15% and 51.99%, respectively, Intel (NASDAQ: INTC) is, in the same period, in the red.

The company – once a household name – is, however, set to receive a major boost from the US government. The company is expected to benefit from the drive to further incentivize national activity of the semiconductor industry to the tune of $10 billion in loans and grants.

Additionally, the US government has recently earmarked as much as $3.5 billion for Intel in order to help the firm produce highly advanced microchips for the needs of the military and intelligence services – though the funding is, reportedly, not yet guaranteed.

Will the government investment help INTC stock soar?

While it is hard to say if the $3.5 billion investment will have a profound impact on Intel shares and see them surge at a pace more akin to the blue-chip chipmaker Nvidia, it remains a strong possibility. 

Indeed, government contracts have historically tended to have a significant impact on the stock market performance of various companies. 

The most recent and dramatic example came in the form of Airship AI (NASDAQ: AISP), an artificial intelligence surveillance company, which saw its shares skyrocket more than 300% in days due to a contract with a Department of Justice (DoJ)-affiliated agency.

Additionally, Intel has, in recent months, been stepping up its game when it comes to producing advanced AI chips – as evidenced by its Gaudi3. 

All in all, between the government investments, internal advancements, the more recent stock market uptrend, and the overall state of the microchip industry, there is a strong possibility that Intel shares might soon see a significant recovery.

Intel stock price chart

While Intel stock’s 2024 performance has been disappointing when compared to competitors like Nvidia and AMD, having fallen 6.88% since January 1, INTC’s longer-term performance is, nonetheless, strong. 

INTC YTD stock price chart. Source: Finbold

In the last 52 weeks, for example, Intel rose 74.34% and, more recently, INTC shares have also been doing better – albeit with significant volatility – and are up 4.04% in the last 30 days and 1.35% in the previous 24 hours, having closed at $44.51.

Intel stock has also seen some activity in the extended trading and INTC shares are up 2% in the session by press time.

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