Intel (INTC) Faces Security Issues, Shares Down More Than 3%

Shares of Intel Corporation (NASDAQ:INTC) suddenly dropped more than 3% in yesterday’s trading session after the media reported that the company has encountered a major security issue.

The security flaw could let attackers to access security keys, passwords, and cached files of a device's kernel memory. A hacker can access its platform and third-party information taking advantage of the system’s vulnerabilities, consequently posing a huge risk for users. The bug is apparently present in nearly every Intel CPU made within the last decade, and upcoming patches will negatively affect hardware performance.

The “kernel” is a core component of the operating system that is tasked with managing the communication between hardware and software. The patches necessary to fix the bug will move the kernel into an entirely different address space, making the communication process more time consuming and less efficient.

Microsoft (NASDAQ:MSFT) , Apple (NASDAQ:AAPL) and Linux programmers are rolling out patches to fix Linux and Windows kernels in order to address the vulnerability. The Register suggested that these patches will result in “a ballpark figure of five to 30 percent slow down, depending on the task and the processor model.”

The company has also gained just 28% in a year, underperforming the industry’s growth of 53.2%.

Impact on its Rival

On the contrary, while Intel’s shares went down, its closest rival Advanced Micro Devices (NASDAQ:AMD) climbed more than 5% in morning trading session on Wednesday after the company stated "near zero risk to AMD processors at this time" by this major security bug.

“AMD processors are not subject to the types of attacks that the kernel page table isolation feature protects against,” AMD engineer Tom Lendacky confirmed.

Last Words

However, its never too late, and Intel’s current approach related to fixing the security issue is likely to help it regain customer confidence. We believe that growing demand for server chips that are used in data centers of cloud-based service providers like Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) and Microsoft is a key catalyst for the company.

Intel has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 9.75%.

Currently, Intel carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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