Intel Stock Rises As Chipmaker Secures $7.9B CHIPS Act Funding From Team Biden: Retail Hopes Improve

The grant comes with several terms and conditions, including Intel agreeing to pause stock buybacks for five years.

Intel Corp. ($INTC) shares climbed over 1% in pre-market trading Tuesday, on track to extend gains for a fourth consecutive session, following news of finalized CHIPS Act funding.

The Biden-Harris Administration and Intel announced an agreement under which the U.S. Department of Commerce will provide up to $7.86 billion to support Intel’s semiconductor manufacturing projects across Arizona, New Mexico, Ohio, and Oregon. 

The funding, part of the U.S. CHIPS and Science Act, will be distributed in stages based on milestone achievements, with at least $1 billion to be disbursed this year. 

Intel also plans to claim the Treasury Department’s 25% Investment Tax Credit for qualifying investments exceeding $100 billion.

The chipmaker committed to pausing stock buybacks for five years, with limited exceptions, building on its earlier decision to halt buybacks amid challenging financial conditions.

On Stocktwits, retail sentiment shifted from ‘bearish’ a day ago to ‘bullish’ early on Tuesday, with heightened message activity. 

Several expressed optimism, with one user calling the government grant “a major game changer,” while another speculated on analysts assigning price targets above $40, a level the stock last hit in early April.

The funding provides a critical boost as Intel navigates its toughest challenges in decades. 

In August, the company announced 15,000 job cuts and reported weak earnings and guidance, signaling difficulties in competing with rivals Nvidia and AMD, particularly in AI and manufacturing. 

Intel is on track for its third consecutive year of declining revenue.

Shares of the company are down approximately 50% year-to-date, while the iShares Semiconductor ETF ($SOXX) has risen 14% and the S&P 500 and the Nasdaq have gained over 25%.

The $7.86 billion grant is slightly lower than the initially anticipated $8.5 billion, as Intel is also receiving separate funding for defense-related projects, as per reports.

This funding marks a pivotal moment for Intel, potentially aiding its turnaround amid significant industry headwinds.

A Stocktwits poll reveals that 34% of retail investors believe Intel will regain market share this year on the back of “success in AI chip innovation” while 26% think it will be because of cost-cutting and restructuring.