Why are Intel (INTC) shares rising so much today?

What happened:

Shares of computer processor maker Intel (NASDAQ:INTC) rose 7% in afternoon trading after the Biden-Harris administration announced that the company (Intel) received up to $3 billion in direct funding for the Secure Enclave program under the CHIPS and Science Act. The CHIPS and Science Act is a U.S. government initiative to promote domestic semiconductor production and reduce dependence on foreign suppliers.

According to the Department of Defense press release, “The (Secure Enclave program) funding will support microelectronics manufacturing and ensure access to a domestic supply chain for advanced semiconductors for national security.”

Notably, Intel is the only American company that designs and manufactures cutting-edge chips. The company also clarified that the award is different from the $8.5 billion funding in partnership with the U.S. Department of Commerce announced earlier this year (March 20, 2024).

To demonstrate its readiness for the task ahead, the company said it is on track to launch the 18A manufacturing process (its most advanced manufacturing process for cutting-edge chips) in 2025.

The update is good news for investors, especially Intel fans who are betting that the company can close the gap with rivals like Taiwan Semiconductor Manufacturing Company, Samsung Electronics and GlobalFoundries. While some may argue that it's still early, the updates are encouraging nonetheless as the company continues to have a difficult year, with shares down more than 50% year-to-date.

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What does the market tell us:

Intel shares are highly volatile, having experienced 19 price swings of over 5% in the last year. With that in mind, today's move suggests that while the market considers this news significant, it does not view it as something that would fundamentally change its perception of the company.

The last big move we covered was 17 days ago, when the stock rose 9.5% after Bloomberg reported that the company was in talks with investment bankers to explore options including splitting its product design and manufacturing businesses. The sources added that decisions were still in the early stages.

Intel has fallen 54% year-to-date and is trading at $22.06 per share, 56.5% below its 52-week high of $50.76 set in December 2023. Investors who bought $1,000 worth of Intel stock 5 years ago would be looking at an investment worth $422.41 today.

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