Why Intel Stock Is Heading for a Chip-Wreck

  • Intel (INTC) is susceptible to problems arising from tensions between China and the U.S.
  • Some analysts are cautious or even outright bearish on chipmakers like Intel now.
  • Investors should think hard before considering a stake in INTC stock.
INTC stock - Why Intel Stock Is Heading for a Chip-Wreck

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Microprocessor manufacturer Intel (NASDAQ:INTC) stock has encountered problems in 2022, and they’re likely to get worse.

For one thing, issues between China and the U.S. are flaring up, and semiconductor makers like Intel are in the crosshairs.

Furthermore, at least two Wall Street experts have provided stern warnings for prospective investors in chipmakers. All in all, it’s just the wrong time to think about buying INTC stock.

Don’t look now, but there’s an international shipwreck – or should I say, a chip wreck – in progress.

INTC Intel $31.46

Escalating Sino-U.S. Tensions and INTC Stock

It’s a war of both words and actions, with broad-based implications. In response to America’s restrictions on certain semiconductor exports to China, representatives of China are lashing out at the U.S. All of this signals trouble ahead for Intel.

U.S. chip stocks tanked on Sept. 1 when U.S. officials halted exports of certain semiconductor sales to China. Clearly, traders and financial experts understood the dire potential implications if international tensions persist.

Moreover, Citi analyst Atif Malik sees “increased volatility for the semiconductors and equipment group” amid “an escalation in U.S. semiconductor restrictions to China.”

In response, to the U.S.’s trade restriction, Wang Wenbin, a Chinese foreign ministry spokesperson, declared, “What the U.S. has done is typical ‘sci-tech hegemony.’” Hence, it sounds as if a tech Cold War between the two nations may be afoot.

Wenbin added, “This violates the rules of the market economy, undermines international economic and trade order and disrupts the stability of global industrial and supply chains. China firmly rejects it.”

It appears, then, that a tech-component trade war may be brewing, and INTC stockholders could end up suffering further financial losses.

Analysts Send Warning Signals About Chipmaker Stocks

Between these geopolitical tensions, rising interest rates and supply-chain woes, Intel already had enough to deal with in 2022. To that list, we can also add weak personal computer (PC) sales. Notably, some analysts have cited this as a major problem.

Bernstein analyst Stacy Rasgon even went so far as to mention Intel by name, saying, “the consumer side of things seems to kind of sort of be in a recession,” and, “Intel’s PC stuff imploded.”

Indeed, Rasgon issued a crucial warning for Intel’s investors: “Anything that is consumer-focused has been bad: PCs, smartphones, GPUs, TVs… Things are getting weaker and they don’t usually get weaker for one quarter.”

In a similar vein, Citi analyst Chris Danely took a bearish stance due to PC-market softness. “We believe negative catalysts will now outnumber positive catalysts given upcoming PC data points and monthly Taiwan sales figures,” he maintained.

Danely clearly anticipates challenges for companies like Intel in the near future.

“We also expect negative data points in September in broader semis as the correction continues,” the analyst said. Referring to Intel and similar semiconductor companies as a group, Danely added, “We expect every company in our coverage universe and every end market to experience a correction.”

Along with all of that, consider that Intel has been a poor performer among chipmakers lately. Bear in mind, Intel posted a GAAP-measured net earnings loss in 2022’s second quarter. In light of that, Intel CEO Pat Gelsinger admitted, “This quarter’s results were below the standards we have set for the company and our shareholders.”

INTC Stock Should Be Avoided

It might be tempting to call INTC stock “cheap” as it has entered into correction territory this year. Yet, the geopolitical and macroeconomic backdrop simply doesn’t justify a position in Intel shares.

Besides, Intel’s quarterly net loss is a serious concern. It’s another indication that investing in Intel could be a costly mistake. So, caution is definitely advised as the deep dip in the share price could soon get much deeper.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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