Intel Stock Sees a Boost Amidst Struggles
Monday morning saw Intel’s stock surge 4.1% after reports emerged that the U.S. Commerce Department is close to awarding the company an $8 billion subsidy to support its semiconductor chip operations expansion. This news comes on the heels of a previous report by The Wall Street Journal, which indicated that Intel was in line for a substantial grant.
A Much-Needed Boost
The semiconductor giant has been struggling, with $16 billion in losses over the past 12 months and a negative free cash flow of $15.1 billion. Its revenue has also declined in the last quarter. To conserve cash, Intel plans to sell off assets and lay off up to 15,000 workers. The $8 billion subsidy will provide some relief, but it won’t single-handedly solve Intel’s problems.
A Long Road to Recovery
Despite expectations that Intel will return to profitability next year, analysts predict that the company will continue to burn cash, with negative free cash flow exceeding $11 billion over the next three years. It isn’t until 2028 that Intel is expected to generate cash on its own to sustain its business. Meanwhile, debt will continue to pile up, and share dilution remains a possibility.
A Cautionary Tale
While the subsidy is a welcome development, it’s essential to approach Intel stock with caution. The company’s struggles are far from over, and investors should be wary of getting caught up in the excitement of the moment.
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