What happened
On a moderately good day for tech stocks with the Nasdaq up 0.7% as of 1 p.m. ET, shares of Intel (INTC +23.60%) are doing better than most, and gaining 2.5%.
That sounds like good news -- but the reasons for Intel's gains seem tenuous at best.
NASDAQ: INTC
Key Data Points
So what
Two news items seem to be supporting Intel stock today. In the first, the U.S.-based Semiconductor Industry Association trade group is urging the Biden administration to soften its stance on China, and "refrain from further restrictions" on chips companies such as Intel selling their wares there. But not only is SIA's suggestion not guaranteed to affect government policy, if it's rejected, there's the potential for companies like Intel to suffer from retaliatory action, specifically, a Chinese threat to throttle exports of semiconductor raw materials such as gallium and germanium, as Reuters reports today.
Thus, while it's certainly possible that if SIA's suggestion is adopted, Intel could benefit from being able to sell more chips to China, if the suggestion is rejected, not only would Intel see no benefit to its revenue, but its costs could increase, squeezing the semiconductor giant on both the top and bottom lines.
Now what
This is not a risk to be taken lightly, yet investors today seem to be assuming that just because SIA is asking for something, SIA will get what it asks for.
Granted, there is a second reason Intel investors could be feeling optimistic today. As ratings watcher The Fly just reported, investment bank Citigroup has put Intel on a "90-day positive catalyst watch," which basically means the banker sees the potential for good news to start lifting the stock sometime in the next few months. As The Fly explains, Citi grounds its optimism in the belief that PC sales are starting to recover -- and that may happen. But it also may not -- very much like the situation with SIA.
Among all these predictions about the future, though, and why that future may be brighter for Intel, two things remain certain for investors.
Today, Intel is a money-losing company carrying more than $50 billion in debt, and burning through cash at the rate of more than $20 billion a year (according to the latest figures from S&P Global Market Intelligence). To me, these present-day facts outweigh any number of hypotheticals about what may or may not happen in the future.
And these facts tell me you're probably better off selling Intel stock than buying it.
