Intel's valuation soars to dot-com era highs amid US government talks and potential SoftBank investment.

Intel's stock has rallied 28% this month, adding $24bn in market value, on reports of US government talks for a potential equity stake and a $2bn investment from SoftBank. The stock is trading at 53 times projected profits, the highest since 2002, making it the most expensive since the dot-com era. Analysts warn of a potential risk in the long term due to the government's involvement.

Intel's stock has surged this month, with a 28% rally adding $24 billion in market value. The resurgence comes on the heels of reports that the U.S. government is in talks for a potential equity stake and a $2 billion investment from SoftBank Group Corp. [1]

The stock is now trading at 53 times projected profits for the next 12 months, the highest since early 2002, according to data compiled by Bloomberg. This valuation level is reminiscent of the dot-com era more than two decades ago. [2]

The sudden rebound follows a period of market turmoil, including a disappointing earnings report on July 24 and criticism of CEO Lip-Bu Tan by President Donald Trump, who called for his resignation. However, Trump has since reversed his stance, praising Tan's "success and rise." [2]

Reports suggest that the Trump administration is discussing converting federal CHIPS Act grants into a non-voting equity position, potentially taking up to a 10% stake in the company. Commerce Secretary Howard Lutnick has confirmed these talks, aimed at stabilizing U.S. semiconductor supply. [2]

Analysts, however, warn of potential long-term risks associated with government involvement. Wayne Kaufman, chief market analyst at Phoenix Financial Services, notes that the high valuation is a bet that the government will push Intel to become a winner. [2]

Despite the optimism, Intel's profitability has collapsed in recent years. The company is projected to generate more than $1 billion in adjusted profit over the next four quarters, after losing about $1.3 billion in the previous four. From 2018 to 2021, Intel generated more than $20 billion in annual profits on average. [2]

Intel's CEO, Lip-Bu Tan, is focused on cost-cutting and turning around the company's fortunes. His efforts include a costly build-out of its foundry operations, which have been plagued by high capital costs and poor customer traction. [1]

The intersection of SoftBank's $2 billion stake and potential U.S. government intervention marks a pivotal moment for Intel. While the stock remains deeply discounted relative to peers, the setup suggests a high-risk, high-reward scenario. [1]

References:

[1] https://www.tradingnews.com/news/intel-nasdaq-intc-stock-surges-6-percent-on-2b-usd-soft-bank-deal
[2] https://www.bloomberg.com/news/articles/2025-08-19/intel-s-24-billion-rally-sends-valuation-to-dot-com-era-levels