Microprocessor manufacturer Intel (NASDAQ:INTC) is likely to benefit from the CHIPS for America Act, also known as the Chips Act, if the U.S. government makes it a law. Besides, INTC stock offers a terrific value now and Intel’s dividend only sweetens the deal.
2022 has been a rough year for America’s chipmakers. However, oftentimes adversity will bring outstanding values in the financial markets. As we’ll see, negative pressure on the Intel share price is really just an opportunity for forward-thinking investors to take a position.
Furthermore, legislators on Capitol Hill seem to be ready to rescue Intel and American semiconductor manufacturers in general. If the government is prepared to chip in, then perhaps there’s hope for an imminent turnaround for Intel.
What’s Happening With INTC Stock?
INTC stock has a 52-week high of $56.28, but today the share price is much lower than that. Value seekers ought to be salivating at the chance to get in now, as Intel’s trailing 12-month price-to-earnings (P/E) ratio is extremely low at 6.6.
Among U.S. tech giants, Intel is also a dividend darling. Income-focused investors should be glad to know that Intel pays a forward annual dividend yield of 3.6%.
Granted, not everyone’s ultra-bullish on microprocessor stocks now. In particular, Goldman Sachs analyst Toshiya Hari lowered his calendar-year 2023 earnings forecasts for chipmakers and semiconductor-equipment stocks by an average of 20%. This reflects the analyst’s concerns about continued deterioration in the macroeconomic environment.
“None of our companies are immune to a slowdown in global GDP,” Hari wrote. His point is duly noted, but the bulls might counter that macroeconomic problems have been factored into the INTC stock price already. That’s why the shares are so cheap right now.
Pro-Chipmakers Bill Moves Forward
Help is on the way: That’s the apparent message from the U.S. Senate as it voted to more forward with the Chips Act. Specifically, the Senate approved a procedural measure that sets the stage for potential votes on the Chips Act in the Senate and House of Representatives.
What’s the bill worth in dollar terms? Senate aides reportedly stated that the Chips Act includes around $54 billion in subsidies for U.S. semiconductor companies. They also said that there’s a four-year 25% tax credit to encourage companies to build plants in the U.S. It’s been estimated that the tax credit is worth roughly $24 billion.
It’s not hard to connect the dots between the Chips Act and Intel’s plans to build a chipmaking factory in Ohio. Intel could potentially spend $100 billion to establish eight fabrication plants in total, and the Chips Act would certainly help Intel achieve this ambitious objective.
What You Can Do Now
There’s no guarantee that the Chips Act will be passed into law. So far, though, there appears to be support in Congress for the bill. President Joe Biden seems likely to sign the bill if it reaches his desk.
Hari’s warning about U.S. chipmakers shouldn’t be ignored. There are macroeconomic factors that investors should keep in mind. Still, INTC stock has already been slammed as Wall Street has considered these factors.
With a little bit of help from Washington, INTC stock could be poised for a comeback. Investors can take a long position while the stock is still bargain-priced.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.