Shares of Intel (INTC +10.80%) have been on a tear, and the latest push higher has come from an unusual place: Washington.
In the past few days, investors have watched a mix of headlines pile up in Intel's favor. The semiconductor company showcased new chips at CES, then President Donald Trump publicly praised Intel CEO Lip-Bu Tan after a White House meeting.
To give Intel credit, there's more than noise to the story. The underlying business has been improving. In fact, management said in the company's most recent quarter that demand is outpacing supply.
But is it too late to buy the stock after its big run-up?
Image source: Getty Images.
Washington's big bet
In August of last year, Intel announced an agreement in which the U.S. government would buy 433.3 million shares at $20.47 per share, equal to a 9.9% stake, as part of a broader package tied to CHIPS Act-related funding and other programs.
Backing from the U.S. government has its benefits. In addition to providing a substantial cash infusion, it gives Intel a powerful signal of support, showing that it is being treated as strategically important.
And the U.S. government apparently benefits, too. With Intel stock now trading above $45, the stock has more than doubled since the government's $20.47 per-share purchase price.
Even more, recent headlines seem to be boosting sentiment for the tech stock. Trump wrote after meeting Tan this week that he had "a great meeting" with the CEO. That public endorsement helped drive another sharp move higher in the stock. Of course, investors should be careful about treating political attention as a permanent advantage. These headlines can change quickly.
Further, even an investment from the U.S. government doesn't replace the need for the underlying business to keep improving. Sure, the support may help Intel buy time and credibility. But it doesn't guarantee execution.
An improving business
Intel's third-quarter results showed tangible progress. Revenue totaled $13.7 billion, representing a 3% year-over-year increase. But gross margin improved sharply, and Intel slashed its operating expenses, which helped push its operating margin back into positive territory. What's particularly telling, however, is that the company said that current demand is outpacing supply and that Intel expects that dynamic to persist into 2026.
Of course, just because demand exceeds supply doesn't mean the company will be able to meet the demand -- and it doesn't mean demand keeps rising sharply.
Intel still needs to prove that it can deliver compelling chips at scale. Its recent CES launch of Panther Lake, built using Intel's "18A" manufacturing approach, is part of that effort. Intel is attempting to manufacture more of its most advanced chips in-house again, rather than relying heavily on outside manufacturers.
NASDAQ: INTC
Key Data Points
So, is it too late to buy?
After a run that has taken shares well above the government's entry price, Intel stock is not the same out-of-favor setup it was last summer. The market is now pricing in a successful turnaround, leaving less room for disappointment.
On the other hand, there's a lot to like. Intel has a long history and deep customer relationships -- and it is clearly being treated as strategically important to the U.S. If Intel's execution steadily improves and it successfully capitalizes on growth opportunities ahead, shareholders could be rewarded.
The easy gains, however, may be in the rearview mirror. Sure, shares could always soar further. But because the valuation has become pricier, there's now more downside risk as well. For existing shareholders, selling after a big rebound could be a mistake since it's been accompanied by improving execution and continued government support. But buying now is risky, in my opinion.
