Intel (NASDAQ: INTC) stock lost ground in Tuesday’s trading. The company’s share price closed out the daily session down 3.3%. Meanwhile, the S&P 500 index and Nasdaq Composite index ended the day up 0.5% and 0.6%, respectively.
Intel stock fell today after it was revealed that the company had only received $7.9 billion in direct funding through the CHIPS Act. Previously, the company had been on track to receive an $8.5 billion grant.
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Intel stock gained ground yesterday after it was announced that its federal funding dispersals through the CHIPS Act had been finalized. But with an announcement that it published today, the semiconductor company revealed that it had only received $7.9 billion in funding through the legislation — short of the $8.5 billion in direct funding that had previously been outlined. The chip giant had also been on track to receive up to $11 billion in additional loans through the CHIPS Act, and it remains to be seen what happens with that funding.
In response to the news, Citi published a new research note on Intel stock. The firm noted that it believed that performance issues at the company and delayed construction for its semiconductor fabrication plant had led to the funding shortfall.
While Citi’s analysts believe that Intel is poised to match Taiwan Semiconductor Manufacturing in fabrication in the second half of next year, they’re not bullish on the company’s ability to turn the fab business into a profitable performance driver. Citi maintained a neutral rating on the stock and a one-year price target of $22 per share, suggesting downside of 8.5% based on today’s closing price.
Federal funding should help Intel continue to build up its fab business, and it’s possible that the company will receive additional government support in the coming years even with the change in the presidential administration and congressional makeup. If Intel is able to scale its third-party fabrication business and attract high-end chip-design customers, its stock could soar above current levels. But the company still has a lot of proving to do on that front.
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