Intel Corporation (Nasdaq: INTC) is at risk of losing market share as investors sell off INTC stock after two large security vulnerabilities were discovered in the company’s computer chips.
INTC stock fell 3.3 percent on Wednesday and 1.8 percent Thursday as investors learned about problems that exposed data stored in the memory of chips used in personal devices and data center servers.
The first vulnerability, referred to as “Meltdown,” is unique to Intel chips. The second vulnerability, called “Spectre,” is found in chips made by Intel, Advanced Micro Devices (AMD) and ARM Holdings.
Intel says it was first alerted of the vulnerability by Alphabet (GOOG, GOOGL), and the company has already been providing software updates to help fix the problems. Intel says the issue should not impact the company’s financials or its market share, but the fixes for the issues will reduce central processing unit performance by 5 percent or less for the average user.
Investors seem to see the issues as an opportunity for Intel competitors AMD and Nvidia Corp. (NVDA) to gain market share. AMD stock is up 11.1 percent in the past two days, while Nvidia stock is up 7.1 percent.
Mizuho analyst Vijay Rakesh says Intel may have more at risk than it is acknowledging. “While INTC does not see a financial or market share impact from the security issue and performance degradation with the vulnerability, we believe its high-performance customers might have a different take,” Rakesh says.
However, Credit Suisse analyst John Pitzer says the fact that at least one of the vulnerabilities is not unique to Intel chips and both issues are being fixed via updates makes the Intel sell-off an overreaction. He does not, however, see it as a buying opportunity for investors.
“While we do not find current valuation … particularly compelling, today’s sell-off related to speculation of security issues appears to have been an overreaction,” Pitzer says. “It is unclear whether or not CPU performance degradation will lead to share shifts and/or changes in pricing longer-term – we suspect not.”
Credit Suisse has…
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