The Government Lost $12 Billion on Intel in a Day. Intel’s Books Gained From the Same Fall.

Intel closed on Thursday at $92.07 a share. At 1:26 p.m. on Friday it was trading at $64.49, down 29.89% on the day, and the holding the United States government bought for $8.9 billion had shed about $12 billion of paper value since the close. The same fall was pulling a number on Intel’s own balance sheet in the opposite direction, because the agreement that made Washington a shareholder ties one of Intel’s own obligations to the share price.

The agreement was announced on Aug. 22, 2025, and closed five days later. The government bought 433.3 million primary shares at $20.47 each, a 9.9% stake, funded by $5.7 billion in CHIPS Act grants that had been awarded but not yet paid and $3.2 billion from the Secure Enclave program. The ownership was passive, with no board seat and no other governance or information rights, and the government agreed to vote with Intel’s board on shareholder matters, with limited exceptions. Commerce Secretary Howard Lutnick said at the announcement that Intel was “excited to welcome the United States of America as a shareholder.” Lip-Bu Tan, Intel’s chief executive, told Nikkei in October that the administration had no policy of using the stake to interfere in the business. “They don’t have any policy. They don’t have any influence on the governance of the company,” he said.

The 433.3 million shares cost $8.87 billion at $20.47. At Thursday’s close they were worth $39.89 billion, and at Friday’s 1:26 p.m. price they were worth $27.94 billion, a fall of about $11.95 billion. The holding had been worth $61 billion at its peak, according to the Wall Street Journal, so more than $33 billion had come off it since then. Even after Friday, the paper gain on the government’s $8.87 billion was about $19.1 billion. A $23 billion equity offering in August 2026 had already cut the stake from 9.9% to about 8.2%, and Intel guided a fully diluted share count of 5.44 billion for the fourth quarter, a full quarter of the offering’s shares.

Nvidia paid $23.28 a share for its $5 billion holding in September 2025, about 214.8 million shares, which were worth about $13.85 billion at Friday’s 1:26 p.m. price. The public offering in August 2026 was priced at $95 a share, 210.5 million shares before the underwriters’ option and 242.1 million with it. SoftBank paid $23 a share for $2 billion of stock the same autumn. Three buyers paid $20.47, $23.28 and $95 for the same company’s shares within a year, and Friday’s price sat between the first two and the third.

About 275 million of those shares went straight to the government and about 159 million went into escrow. The escrowed shares are released only as Intel receives payments under the Secure Enclave program, with each released share credited at $20 against those payments. Intel carries the unreleased shares as a derivative liability measured at fair value, so the obligation grows when the share price rises and shrinks when it falls, and the change runs through reported profit without any cash changing hands. Intel’s filings say it expects “to recognize further such gains or losses in future periods based on future decreases or increases of our stock price, as the case may be.”

The clause had been swinging Intel’s reported results all year. In the first quarter of 2026, six million escrowed shares were released and Intel booked a $1.1 billion fair-value loss on the position. In the second quarter, a $12.529 billion loss on the escrowed shares pushed Intel to an $11.0 billion net loss, or $2.16 a share on a GAAP basis, in a quarter when operating income was $1.8 billion and non-GAAP earnings were 42 cents a share. In the third quarter, the price slipped and the same line produced a $1,005 million gain, booked in interest and other, net, lifting GAAP earnings to 60 cents a share against 52 cents on the non-GAAP basis Intel’s investors watch. Across the first nine months of the year, the net mark-to-market charge on the escrowed shares was $12,614 million.

On Sept. 26, 132 million shares were still in escrow, carried at $13.7 billion, or about $104 a share, close to the end-September price of about $123 minus the $20 credit. Each $1 move in the share price moves that obligation by about $132 million, so the $27.58 fall from Thursday’s close to Friday’s 1:26 p.m. price implies a pre-tax accounting gain of about $3.6 billion on the simplified math, and the fall from about $123 implies about $7.7 billion. The actual figure will be decided by the price at the Dec. 26 quarter end, by how many shares are released before then, and by other valuation factors. It would add no cash, Intel strips it out of its non-GAAP results, and the fourth-quarter GAAP earnings guide of 10 cents a share contains no separate adjustment for it.

A second term in the agreement belongs to the government rather than to Intel’s accounts. The government received a five-year warrant at $20 a share for an additional 5% of Intel, 240,516,150 shares, exercisable only if Intel ceases to own at least 51% of its foundry business. At Thursday’s close, the warrant’s intrinsic value was about $17.33 billion; at Friday’s 1:26 p.m. price it was about $10.70 billion, a shrinkage of about $6.63 billion in the same fall. Intel’s foundry reported third-quarter revenue of $6.7 billion, up 58% from a year earlier, with an operating loss of $1.9 billion and $411 million of revenue from outside customers. Bank of America downgraded the stock to neutral on Friday, with analyst Vivek Arya saying it “has not communicated enough traction with external foundry customers.” Tan said Intel had released its 14A 0.9 process design kit to select customers in October and expected “a couple of” highly strategic customers to be announced.

The quarter that produced the fall had beaten Intel’s own guidance. Third-quarter revenue was $16.5 billion, up 21% from a year earlier, with data center and AI revenue up 78% to $7.3 billion and an operating profit of $3.0 billion in that division. The fourth-quarter guide was $15 billion to $16 billion of revenue, against a consensus of about $17.05 billion, with non-GAAP earnings of 25 cents a share against 43 cents expected and a non-GAAP gross margin of 38%, down from 44.1%. Client computing revenue, $8.1 billion in the third quarter and down 5% from a year earlier, was guided to fall by more than 20% sequentially as customers cut inventory. Intel expects PC unit shipments to fall about 12% in 2026, with the second half down more than 20%, and about 10% in 2027, with no sustained recovery until memory availability improves and prices normalize.

Fab 28, the Kiryat Gat plant that makes 10-nanometer server chips, had been shut for about two weeks when chief financial officer Dave Zinsner spoke on the earnings call. An explosion there on Oct. 14 killed two workers and seriously injured a third, and Israel’s Fire and Rescue Services reported a nitrogen trifluoride leak after the blast. Zinsner put the revenue cost at about $300 million in the fourth quarter and a similar amount in the first quarter of next year, with 200 basis points of gross margin, and said Intel hoped to restart production by the end of that week. Chips take about three months to move from raw silicon to finished products, so wafers assessed after the shutdown will keep affecting output after the plant reopens.

Tan said he was disappointed Intel had not met strong customer demand in the quarter. He said the company needed to address the shortages, the memory crunch and the PC softness “with urgency.” Capital spending was $20 billion in 2026 and is set to rise strongly in 2027, with firm equipment orders up nearly 40% sequentially. Zinsner called 2027 an investment year in which Intel is unlikely to generate positive free cash flow. The company ended the quarter with about $54 billion in cash and short-term investments, plus $15 billion of borrowing capacity under extended revolvers.

Seventeen analysts cut their price targets on Friday, according to Finbold’s count. Bank of America cut its target to $100 from $145 and lowered its estimate of Intel’s 2030 earnings power to $5 to $6 a share from $6 to $7. Roth Capital cut to $70 from $120 and downgraded to neutral. Jefferies cut to $85 from $120 and called the December-quarter outlook a “substantial” reset. Bernstein cut to $75 from $110, with Stacy Rasgon calling the outlook “(in a word) terrible” and pointing to too much capacity for PC products and too little for servers. Citi kept a buy rating and cut to $100 from $130, calling the third quarter a strong beat and the outlook weak.

A shareholder derivative suit is seeking to have the agreement invalidated. It names Intel’s directors, the Department of Commerce and Secretary Lutnick, and alleges breach of fiduciary duty in approving the deal. The Intel holding is one of 43 government deals involving stock or warrants convertible into equity, totalling around $30 billion, according to a Council on Foreign Relations tally cited by the Wall Street Journal. Intel ended the quarter with 76,500 employees, against 83,300 a year earlier.