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UPDATE: Intel stock heads for worst day in nearly 2 years, AMD pops on chip design flaw report1-3-18 2:39 PM EST

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 headed for their worst day in nearly two years Wednesday, following a report that its chips have a security design flaw that will slow down computers by up to 50% after software publishers patch their operating systems.

Intel (INTC) shares fell 6.1% to $44, on track for their worst one-day percentage loss since Jan. 15, 2016, when shares dropped 9.1%. Shares were the second most heavily traded stock on the S&P 500 index with more than 71 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)

Intel has yet to respond to a request for comment.

The most heavily traded stock on the S&P 500, at volume of more than 98 million shares, was rival chip maker Advanced Micro Devices Inc.(AMD), whose shares rallied 9.5% to $12.02. Over the past two sessions, shares are up 17%, 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 6.8% to $213. 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 12th most heavily traded stock on the S&P 500 at more than 17 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 33 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 1439ET

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