Intel braces for earnings as US takes 10% stake amid chip rout
Intel is preparing to report second-quarter earnings against a backdrop of a severe semiconductor selloff, but a newly acquired 10% government stake and a preliminary Apple manufacturing deal may insulate its turnaround narrative from broader AI spending fears.
Intel is set to report second-quarter earnings at a pivotal moment for the semiconductor sector, buffered by an unprecedented federal intervention even as its peers face a steep selloff. The chipmaker’s stock remains up 311% over the trailing 12 months despite a roughly 30% pullback from its June highs.
The broader semiconductor market is under severe pressure, with the VanEck Semiconductor ETF dropping roughly 9% over the past month. Major benchmarks fell on the week ending July 17, dragging the NASDAQ down 2.9%, as investors reassess the sustainability of massive AI infrastructure spending.
This reassessment was triggered by Chinese startup Moonshot AI, which launched a model claiming to close the performance gap with US rivals. "The latest development is competition from open-source models in China, which are reportedly rivaling the performance of leading offerings from Anthropic and OpenAI, raising fresh concerns about the heavy pace of technology spending," said Angelo Kourkafas, senior investment strategist at Edward Jones.
Those concerns are translating into revised expectations for the hyperscalers that drive chip demand. UBS estimates that capital expenditures will spike 76% in 2026, but then decelerate sharply to 25% the following year and just 6% by 2028.
Government intervention buffers Intel
Intel finds itself uniquely positioned within this turbulence due to direct political backing. In August 2025, the White House converted $9 billion in federal grants into a 10% ownership stake, effectively adopting the chipmaker as a strategic priority.
The government's stake is structured as passive ownership without a board seat, though it must vote with Intel's board on shareholder matters barring unspecified "limited exceptions." Washington also secured a five-year warrant at $20 per share for an additional 5% stake, exercisable only if Intel loses control of its foundry business.
That federal backing has already yielded commercial results, with the Trump administration convincing major tech giants to engage with Intel. Most notably, the chipmaker reportedly reached a preliminary agreement to manufacture Apple-designed chips. As the sector grapples with the implications of cheaper Chinese AI models, investors will focus on whether these structural advantages can sustain Intel's historic rally.
