Stock in Intel (NASDAQ: INTC) hasn't been reflecting the fantastic week that investors have been experiencing. On Wednesday, the Wall Street Journal reported that Intel has received $8.5 billion in subsidies from the U.S. Commerce Department to assist with the expenses associated with increasing semiconductor production in Arizona, New Mexico, Ohio, and Oregon.
Intel will receive a whopping sixteen percent of the fifty-three billion dollars allotted by the "Chips Act" of 2022. Intel stock had its price objective increased to a massive $100 by Global Equities Research analyst Trip Chowdhry on Thursday, reflecting his optimistic outlook on the news.
Do you think Intel stock is a good choice? A massive vote of confidence, given that Intel stock is currently trading at over $42. According to Chowdhry, this $182 billion firm will see its worth more than quadruple in the next twelve months. What is it that has piqued his interest so much?
At least we have $8.5 billion in free public funds to work with. But that's not all: according to Chowdhry, no other business can produce the power-efficient "next generation" 18A and 14A AI processors that will be required to sustain the AI revolution.
The "18A" stands for the processor's size and its 3D stacked arrangement; both are 1.8 nanometers.
Intel looks to be in the lead when it comes to 3D stacked chips, while other companies like Advanced Micro Devices and Taiwan Semiconductor Manufacturing are also investigating the possibility.
Intel may be able to turn things around this year and surpass its competitors in the future with the help of some free government funding, thanks to 3D architecture, smaller chips, and improved power efficiency.
Having said that, dangers lurk. One, Intel spent $14.3 billion on expansion last year, and $8.5 billion hardly covers half of that. Plus, free cash flow is predicted to stay negative until 2026. With a trailing P/E ratio of 250 and a profit per share of $0.40 in the previous year, $100 per share is a rather ambitious price goal for the company!
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