Why Intel Stock Kept Going Down Today

According to a Wall Street Journal that appeared in print this morning, Intel (INTC -2.21%) stock is too big to fail. Based on trading today, investors aren't so sure about that. Shares of the once-upon-a-time semiconductor king slipped 2% through 1:45 p.m. ET on Monday, extending an almost uninterrupted slide in share price since the company's disastrous second-quarter earnings report that has cost the stock 37% in just a little over a week and a half. What the WSJ says about Intel In the column, the Journal argued that while Intel will take a long time and a lot of money to turn itself around, its recovery is inevitable for several reasons. First and foremost, the company has factories that are actually worth more than the stock currently sells for, and these are "key to Intel's staying power." The importance of semiconductors to modern life and modern economies, says the Journal, means the U.S. government cannot allow Intel to fail as a business. The publication points to the 2022 Chip Act passed by Congress, and the $8.5 billion in subsidies that the government awarded to Intel to assist it in building new chip factories in Arizona and Ohio. Although these factories aren't currently running at full capacity (a big reason Intel's earnings missed by so much), the Journal says that Intel could fill out their capacity if it either figures out a way to compete with Nvidia (NVDA 4.91%) in artificial intelligence chips, or farms out unused capacity to other chipmakers as a foundry (or contract chipmaker). Is Intel stock a buy? The problem for Intel, and for its investors, is that whichever of these tracks Intel takes, the strategy will take time to succeed. In the meantime, investors must resign themselves to owning a second-tier chipmaker with an operating profit margin worse than any of the companies it has to compete with: AMD (AMD 1.78%) at 4.6%, Taiwan Semiconductor Manufacturing (TSM 0.50%) at 42.6%, or Nvidia at 64.9%. With numbers like these, it's hard to call Intel stock a buy.