1-3-18 3:21 PM EST | Email Article

By Wallace Witkowski, MarketWatch

AMD and Intel are most heavily traded S&P 500 stocks after report that Intel chips require updates that could slow down computers

Intel Corp. shares pared earlier losses Wednesday after the company said a report its chips have a unique security-design flaw that could eventually slow down computers by up to 50% was inaccurate.

Intel (INTC) shares, which had been down as much as 6% earlier, declined 4.2% to $44.89 and were on track for their worst one-day percentage loss since Oct. 19, 2016, when shares dropped 5.9%. Shares were the second most heavily traded stock on the S&P 500 index with more than 91 million shares exchanging hands.

Late Tuesday, online technology news site The Register reported that a "fundamental design flaw" (https://www.theregister.co.uk/2018/01/02/intel_cpu_design_flaw/) in Intel chips has caused Linux coders and those at Microsoft Corp.(MSFT) to patch their operating systems for security reasons. Most damning, however, is that the report said these patches will slow down performance by 5% to 30% in certain systems with Intel chips, and that AMD processors were not affected.

Opinion: Intel suffers an epic security fail, offering a big opportunity for AMD (http://www.marketwatch.com/story/intel-suffers-an-epic-security-fail-offering-a-big-opportunity-for-amd-2018-01-03)

"Recent reports that these exploits are caused by a 'bug' or a 'flaw' and are unique to Intel products are incorrect," Intel said in a statement. "Based on the analysis to date, many types of computing devices--with many different vendors' processors and operating systems--are susceptible to these exploits."

The company continued: "Intel is committed to product and customer security and is working closely with many other technology companies, including AMD, ARM Holdings and several operating system vendors, to develop an industrywide approach to resolve this issue promptly and constructively."

The most heavily traded stock on the S&P 500, at volume of more than 120 million shares, was rival chip maker Advanced Micro Devices Inc.(AMD). Shares, which had rallied more than 10% earlier, rallied 6.5% to $11.69. Over the past two sessions, shares are up nearly 14%, after having declined 9.3% over the course of 2017. By comparison, the PHLX Semiconductor Index rose 38.2% in 2017, and is up 4.3% for the first two days of 2018.

Nvidia Corp. (NVDA) shares also rallied, gaining 6% to $211.36. The gains in AMD and Nvidia follow Tuesday's strong day for chip makers following reports of strong November sales (http://www.marketwatch.com/story/amd-chipmakers-drive-tech-rally-on-2018s-first-day-of-trading-on-strong-sales-data-2018-01-02). Nvidia shares were the 11th most heavily traded stock on the S&P 500 at more than 19 million shares.

"This is a positive in our view for Nvidia (Data Center)," RBC Capital Markets analyst Mitch Steves wrote in a Wednesday note of the Intel news. Steves has an outperform rating on Nvidia but does not cover AMD. "If there are speed/performance issues with Intel products, this gives Nvidia a chance to gain market share while the issues are being resolved."

Micron Technology Inc. (MU) shares were the fifth most traded stock on the S&P 500 with more than 35 million shares changing hands. Shares of the chip maker rose 2.6%.

A little over two months ago, the roles were reversed: Shares of Intel surged after posting "impressive" earnings (http://www.marketwatch.com/story/intel-stock-soars-to-17-year-high-after-impressive-earnings-2017-10-27) while AMD shares dropped even after topping Wall Street expectations (http://www.marketwatch.com/story/amds-stock-tumbles-as-solid-results-werent-good-enough-for-wall-street-2017-10-25).

-Wallace Witkowski; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

01-03-18 1521ET

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