Jim Cramer Sees Intel as a Buy Despite Government Stake

Jim Cramer told a caller on September 3 that he remains fully committed to Intel Corporation despite its stock falling after a strong earnings report. The Mad Money host attributed the stock's decline to investor anxiety over the U.S. Government's large equity position in the chipmaker.

Cramer said he got too excited about Intel knowing it would have a good quarter. "It had an unbelievable quarter, and the stock went down anyway," he stated. He identified the core issue as the government's substantial holding. Investors are waiting to see if and when that stake will be sold, which has created a persistent drag on the share price.

Operational Turnaround and Earnings Strength

Intel's fundamental business is showing clear signs of recovery. The company's second-quarter revenue reached $16.1 billion, significantly exceeding Wall Street forecasts. This performance was driven by strong demand for its Xeon data center processors and tangible advances in its 18A manufacturing technology.

For long-term investors, these results validate the company's massive multi-billion dollar investments in rebuilding its chip fabrication capabilities. The earnings indicate that Intel's strategic comeback and its push into artificial intelligence hardware are beginning to yield financial results.

The Government Stake and Foundry Drag

Despite the strong operational performance, Intel's stock faces a major psychological hurdle. As Jim Cramer highlighted, the large equity stake held by the federal government acts as a constant overhang. The market is preoccupied with the potential for a large block of shares to be sold, which suppresses buying interest and weighs on the stock price.

Compounding this issue are ongoing challenges within Intel's foundry business segment. This unit continues to report operating losses as it invests heavily in scaling up its capital-intensive fabrication infrastructure. These structural headwinds leave the stock susceptible to sentiment-driven declines, even when company fundamentals improve.

Hedge Fund Activity and Investor Sentiment

Institutional investor behavior reflects a growing but cautious engagement with Intel's recovery story. Tracking data from Insider Monkey shows that 138 hedge funds held positions in Intel during the second quarter. This represents an increase from 112 funds in the preceding quarter.

Short interest in Intel stands at 2.57% of the public float. This level indicates a measured degree of market skepticism without reflecting an aggressively bearish short-selling campaign against the company.

Jim Cramer expressed his personal dilemma, considering buying more shares to lower his average cost. "I understand it is mixed, but my belief in Intel is 100%," he said. He concluded that for the stock to move decisively, the market needs to see the government exit its position or for investors to look past it and buy regardless.