On Wednesday, CFRA maintained a Hold rating on Intel Corporation (NASDAQ:) with a consistent price target of $45.00. Intel has secured a substantial $8.5 billion grant from the CHIPs Act, aligning with forecasts and earmarked to support the company’s ambitious investment plans exceeding $100 billion over the next five years. This grant is a significant increase from the less than $2 billion in CHIPs funds previously allocated to other companies.
Intel’s expansion into foundry services is seen as a promising avenue for growth, yet concerns about the company’s ability to execute these plans persist. Challenges such as a shortage of skilled labor in the U.S. and the need for confirmation of large-scale orders are highlighted as potential risks. The analyst pointed out that while these developments are positive, there are execution risks that need to be navigated.
Free cash flow (FCF) for Intel is expected to be challenging to generate through 2025, as the company’s capital expenditure needs are projected to surpass $20 billion annually. However, Intel’s strategy to sell off assets and the anticipated recovery of the industry are seen as mitigating factors that could support the company’s financial position in the coming years.
Intel plays a critical role in the United States’ strategic goal to domestically produce 20% of the world’s leading-edge semiconductor chips by the end of the decade. The success of the semiconductor industry in reducing dependence on Taiwanese manufacturing, which currently dominates the market, is deemed crucial. This is particularly important in light of the high geopolitical risks associated with the concentration of chip manufacturing in Taiwan.
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