What Happened?
Shares of computer processor maker Intel (NASDAQ: INTC) jumped 4.3% in the morning session after the U.S. government announced it will take a nearly 10% equity stake in the chipmaker through an $8.9 billion investment.
The move came after Intel and the Trump Administration announced an agreement for the U.S. government to make an $8.9 billion investment in the company's common stock. This investment gives the government a 9.9% equity stake in the chipmaker. The funding is sourced from $5.7 billion in grants under the CHIPS and Science Act and $3.2 billion from the Secure Enclave program, effectively converting previously awarded grants into equity. According to the terms, the government will purchase 433.3 million shares at $20.47 each. This strategic investment is intended to support the expansion of American technology and manufacturing leadership while bolstering the domestic semiconductor industry.
After the initial pop the shares cooled down to $25.21, up 1.6% from previous close.
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What Is The Market Telling Us
Intel’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.2% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
Intel is up 24.7% since the beginning of the year, and at $25.21 per share, it is trading close to its 52-week high of $27.39 from February 2025. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $510.00.
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