Of course, the US’ plans regarding Intel haven’t been finalised and could still change. Intel didn’t respond to a request for comment.

For Paul Nolte, market strategist and senior wealth manager at Murphy & Sylvest Wealth Management, the potential government involvement could benefit Intel in the short term but may pose a risk in the long term.

“This strikes me as an easy road to get onto, but a hard one to get out of,” Nolte said. “At the end of the day, this raises so many more questions than it answers.”

Meanwhile, Intel’s premium valuation is largely a reflection of just how much its profitability has collapsed in recent years.

Intel is projected to generate more than US$1b in adjusted profit over the next four quarters, after losing about US$1.3b in the previous four, according to data compiled by Bloomberg. From 2018 to 2021 the company generated more than US$20b in annual profits on average.

Still, there is optimism that chief executive officer Lip-Bu Tan will be able to turn things around. Much of his focus has been on cost-cutting, which has improved Intel’s outlook to return to profitability but raised concerns the chipmaker may be bowing out of the race for technological leadership. Part of his effort has also been centred on a costly build-out of its foundry operations undertaken by his predecessor, Pat Gelsinger.

“Clearly it’s going to take a number of years for it to really start operating on a smooth basis,” said Gerrit Smit, lead portfolio manager of the Stonehage Fleming Global Best Ideas Equity fund. “We’ve got trust in him, but we think he’s got a long slog ahead.”