AMD Stock Takes a Hit as US Invests $5.7B in Rival Intel

AMD stock dips 2.89% after the US government invests $5.7B in rival chipmaker Intel, taking a 10% stake. The deal prevents Intel from selling its chip fabrication division and allows the government to buy an additional 5% stake at $20/share. AMD has surpassed Intel in performance metrics and market share, but now faces a rival backed by the US government. Analysts' consensus rating for AMD is Moderate Buy with a $184.74 average price target, representing a 12.9% upside.

AMD's stock has seen a significant dip of 2.89% following the U.S. government's investment of $5.7 billion in rival chipmaker Intel, securing a 10% stake in the company. This strategic move by the Trump administration comes as Intel's market share and performance metrics have been lagging behind those of AMD. The deal, announced on August 22, 2025, involves the government purchasing 433.3 million shares at $20.47 per share, effectively taking a 10% equity position in Intel [1].

The U.S. government's investment aligns with the broader goals of the CHIPS Act, which aims to bolster domestic semiconductor manufacturing and national security. The deal also includes a warrant for the government to buy an additional 5% of Intel shares if the company is no longer the majority owner of its foundry business. This strategic investment provides Intel with critical liquidity to fund its $100 billion U.S. manufacturing expansion, including a new Arizona facility [2].

However, the move has raised concerns among investors and analysts. While the immediate capital infusion is beneficial, it comes at the cost of diluting existing shareholders by 11% and reducing voting rights. Intel's stock initially surged 6% during trading on Friday but later retreated, reflecting investor skepticism about the company's ability to compete with rivals like Taiwan Semiconductor and AMD [1].

The government's stake in Intel is part of a broader shift in U.S. industrial policy, blending subsidies with equity stakes to align corporate and national interests. This model could potentially be replicated in other sectors, such as defense or energy. However, it raises questions about long-term sustainability and the balance between strategic goals and market trust. The success of this approach will depend on whether it fosters innovation without compromising market autonomy [2].

For AMD, the deal presents a new competitive challenge. AMD has been surpassing Intel in performance metrics and market share, but now faces a rival backed by the U.S. government. Analysts' consensus rating for AMD remains a Moderate Buy with a $184.74 average price target, representing a 12.9% upside [3].

In conclusion, the U.S. government's investment in Intel represents a significant strategic move to bolster domestic semiconductor manufacturing. While it provides Intel with critical funding, it also introduces political risks and valuation uncertainties. For AMD, the deal presents a new competitive landscape, but analysts remain optimistic about the company's long-term prospects.

References:
[1] https://www.cnbc.com/2025/08/22/intel-goverment-equity-stake.html
[2] https://www.ainvest.com/news/government-equity-stake-intel-strategic-investment-political-risk-2508/
[3] https://stocktwits.com/news-articles/markets/equity/intel-warns-of-multiple-uncertainties/chssxR8RdSJ