| | | Intel’s Trump Deal Is Just 1 More Reason to Sell, Analyst Says
By Martin Baccardax
Aug 25, 2025, 4:08 pm EDT
Former President Ronald Reagan once famously described the nine most terrifying words in the English language as: “I’m from the government, and I’m here to help.” Intel CEO Lip-Bu Tan might be included to agree.
Having been summoned to the White House earlier this month following an accusation from Sen. Tom Cotton that tied him to state-owned business in China, Tan has wound up having ceded nearly 10% of the chip maker to the U.S. government.
President Donald Trump was in a mood to celebrate, saying he “paid nothing” for the shares and promising the stake would be “a great deal for America and, also, a great deal for Intel.” Although the stock has risen, not many analysts seem to agree it will help for long.
Jay Goldberg, a senior analyst at Seaport Research Partners, thinks the deal, which converts around $9 billion in funds earmarked under President Joe Biden’s Chips and Science Act program into a 9% equity stake, still leaves Intel with a host of challenges. He rates Intel stock at Sell, with a target of $18 for the price, some 27% below where the shares closed on Friday.
“The stake in Intel does nothing to shore up the company’s funding needs, except for the possible signal it sends to commercial entities to follow suit and actually invest in the company,” he said in a note published Monday.
Goldberg thinks Intel needs at least another $20 billion to shore up its 14A process, a next-generation technology that it hopes will justify its chip-manufacturing expansion. Without that cash, he argues, “the company’s future in semis manufacturing essentially comes to an end.”
He also points to a number of questions, most of which remain unanswered, in the unorthodox arrangement.
“There is no clear legal mechanism for this exchange, and so could theoretically require congressional approval,” he said. “The government is not pledging to support Intel in any other way [beyond unlocking the Chips Act money] and governance remains highly uncertain” now that the president has said he “controls” Intel.
All that said, Intel stock has risen more than 18% since Tan met with Trump at the White House on Aug. 11. It has gained nearly 24% since the start of the month.
But Intel also told investors, through a Securities and Exchange Commission filing published Monday, that the new stake will dilute existing shareholders. If the government also converts the warrants it purchased, which are linked to the ownership of Intel’s foundry business, they could be diluted even more.
Goldberg at Seaport Research thinks the most likely benefit from the stake is that it could encourage other companies to invest in Intel, with the aim of accelerating its domestic chip production, which has already been delayed to around 2031.
But that, he argues, “leaves investors in a precarious limbo.”
“On the one hand, news of outside investment will be seen as a strong positive for the stock,” he said. “But on the other hand, once the glow of those investments fade, the company’s commercial prospects remain highly challenged.”
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