Can Intel Benefit From Higher Tax Credits in the New Tax Bill?

With tax credits for semiconductor firms rising to 35% from the existing 25% slab, the new tax bill (dubbed as the ‘One Big Beautiful Bill’) that President Trump signed into law on July 4 has seemingly offered a new lifeline to Intel Corporation INTC. The law enables Intel to save big while expanding its manufacturing processes in the country before the 2026 deadline. The increased tax credit builds on the 2022 Chips and Science Act, which offers $39 billion in grants and up to $75 billion in loans for manufacturing projects.

The company has received $7.86 billion in direct funding from the U.S. Department of Commerce under the U.S. CHIPS and Science Act to advance critical semiconductor manufacturing and advanced packaging projects in Arizona, New Mexico, Ohio and Oregon. Intel has been investing in expanding its manufacturing capacity to accelerate its IDM 2.0 (Integrated Device Manufacturing) strategy. Interim management is committed to keeping the core strategy unchanged despite efforts to drive operational efficiency and agility. 

The company is emphasizing the diligent execution of operational goals to establish itself as a leading foundry and is focusing on simplifying parts of its portfolio to unlock efficiencies and create value. Intel is reportedly considering shelving most of the third-party production on 18A to focus more on 14A production – the next-generation manufacturing process that purportedly offers competitive advantages against rivals. This marks a significant shift to the foundry business as Intel aims to woo major customers while concentrating more on core operations.  

Other Semiconductor Firms Likely to Gain

NVIDIA Corporation NVDA is likely to gain significant funding for scaling AI infrastructure across federal agencies, research labs and public-private data centers. Federal tax credits and grants for domestic AI training hubs are expected to accelerate demand for NVIDIA’s H100, GH200 and Blackwell chips, strengthening its market position as a trusted AI chip provider. The security-grade GPU/IP validation may further open up new federal and defense AI applications for NVIDIA, adding billions in addressable market size.

Advanced Micro Devices, Inc.’s AMD AI and high-performance CPU portfolio aligns perfectly with the One Big Beautiful Bill push for AI data center expansion across healthcare, national labs and the telecom sector. Advanced Micro is likely to gain healthy funds for expanding its domestic manufacturing operations to deploy chips in AI-enabled base stations, radio access nodes and autonomous IoT gateways. In addition, R&D hubs in Santa Clara, CA and  Austin, TX qualify Advanced Micro for enhanced R&D credits.

INTC’s Price Performance, Valuation and Estimates

Intel shares have declined 36.5% over the past year against the industry’s growth of 16.5%.

Going by the price/sales ratio, the company's shares currently trade at 1.85 forward sales, lower than 14.76 for the industry. 

Earnings estimates for 2025 have decreased 6.7% to 28 cents per share over the past 60 days, while the same for 2026 have declined 6.3% to 74 cents.

Intel stock currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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