Explore the Single Artificial Intelligence (AI) Semiconductor Shares I Believe are Set for Significant Gains Under the Trump Administration (And It Isn't Nvidia)

Explore the Single Artificial Intelligence (AI) Semiconductor Shares I Believe are Set for Significant Gains Under the Trump Administration (And It Isn't Nvidia)

With the election results finalized and Donald Trump being declared the president-elect, it's time to contemplate what a fresh administration in Washington, D.C., might entail. As Trump was previously president from 2016 to 2020, investors at least have a sense of the policy shifts they might anticipate.

I'm going to explain why I believe Intel (INTC -1.24%) could potentially be a major winner under the upcoming Trump administration.

Intel and the CHIPS Act

One of the significant initiatives under the Biden-Harris administration was the CHIPS and Science Act. Primarily, the act aims to increase investment in domestic tech research and amplify semiconductor manufacturing capabilities in the U.S., thereby challenging overseas competitors more intensely.

Since the CHIPS Act was enacted into law in 2022, Intel has been awarded several government contracts worth billions of dollars. With Trump moving into the White House in January, I believe Intel's relationship with the federal government is about to strengthen further.

How a Trump White House could advantage Intel

Throughout his campaign, President-elect Trump repeatedly pushed one economic theory: tariffs. Trump's aim isn't just to generate more domestic revenue through tariffs. Instead, his administration intends to use tariffs as a form of leverage in foreign trade policy matters.

Here's how tariffs on foreign imports could potentially serve as a significant catalyst for Intel:

1. Government contracts: Given that Trump is likely to favor American manufacturing and businesses over foreign competitors, I wouldn't be surprised to see Intel receive further contracts under the CHIPS Act. Furthermore, imposing tariffs on semiconductors created abroad benefits Intel, as it can offer more competitive pricing on its domestically manufactured products. In turn, chip demand might shift from relying heavily on overseas manufacturers to U.S. manufacturers like Intel.
2. Artificial Intelligence (AI) and the military: One of the lesser-known opportunities in the AI scene revolves around how military agencies utilize the technology. AI is a multibillion-dollar opportunity for the defense sector, and I think Intel has a chance to make an important contribution here.

It's no secret that security is increasingly crucial in supply chain logistics, particularly when vital tech components are sourced outside the U.S. If the incoming Trump administration implements stricter protocols related to defense technology, Intel could play a vital role in providing secure, U.S.-sourced infrastructure.

Is Intel stock a buy?

To be honest, Intel has had a challenging year in 2024. The company is losing ground to its competition, primarily Taiwan Semiconductor Manufacturing. A less-than-favorable review from Broadcom regarding Intel's Foundry technology doesn't exactly present an enticing investment opportunity. To top it all off, Intel was recently removed from the Dow Jones Industrial Average by none other than Nvidia.

With shares down nearly 50% since the beginning of the year, at the time of this writing, Intel stock and its business as a whole seem to be in a nosedive.

However, I'm tentatively optimistic that Intel might present a lucrative turnaround opportunity given its already close ties with the federal government and Trump's commitment to upholding domestic manufacturing.

For now, I think the prudent approach is to wait on the sidelines until Trump takes office in January. Once that happens, investors will have a clearer understanding of who his cabinet will be and how his policy agenda is progressing. In turn, investors should be able to better gauge if there's any new upside for Intel.

In light of Trump's emphasis on tariffs in his economic policy, Intel could potentially benefit from increased government contracts due to the president-elect's preference for domestic manufacturing over foreign competitors. Furthermore, the strengthened relationship between Intel and the federal government under the Trump administration could provide Intel with opportunities in the defense sector, especially in the area of artificial intelligence and supply chain security, given the increasing importance of security in sourcing vital tech components.

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