Why Intel Stock Popped on Friday

Key Points

• Bloomberg reports the U.S. government may invest directly in Intel.

• Intel needs tens of billions of dollars to complete a chip fabrication plant in Ohio, and lacks the cash to do it.

• The U.S. government wants Intel to succeed to help bring chip manufacturing back to the U.S.

• 10 stocks we like better than Intel ›

Intel (NASDAQ: INTC) stock jumped 3.7% through 3:15 p.m. ET Friday after Bloomberg reported the U.S. government may want to "help Intel build out its planned chip complex in Ohio."

And by "help," I mean "invest billions of dollars in Intel stock."

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Image source: Getty Images.

We're from the government, and we're here to help

According to the news agency, Intel, which burned through more than $15.5 billion in negative free cash flow last year, has had to delay construction of a new semiconductor facility in Ohio due to lack of cash.

The government, meanwhile, is determined to bring more chipmaking back to the U.S., and has a vested interest in seeing Intel succeed -- and pro-ceed with its build-out. Accordingly, the Trump administration has begun talks with Intel about taking a stake in the company -- similar to how the Pentagon in July agreed to invest $400 million in rare earths mining company MP Materials (NYSE: MP) -- in exchange for the cash Intel needs.

How much money might the government invest? That's hard to say right now, as neither the government nor Intel want to comment on Bloomberg's story. Intel plans to invest $100 billion in its Ohio manufacturing center, though, while its balance sheet is showing nearly $30 billion in net debt.

So chances are, Intel is going to want a pretty big investment.

Is Intel stock a buy?

Hopes that Intel will get its wish have investors betting heavily on Intel stock today, but I wouldn't be in any great rush to follow them. Priced north of $100 billion in market cap, but burning cash and losing money at the rate of $20.5 billion a year, Intel isn't the kind of business I want to own.

To me, the stock still looks like a sell.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends MP Materials and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.