Rick Schafer Cautions Against Assuming Intel Corporation (INTC) Security Issues Are Positive for AMD; Those CPUs Are Vulnerable Too

Oppenheimer's Rick Schafer notes that the Intel bugs could present "serious" short-term challenges, but stand to be corrected "more easily" than the rest of the chip makers hit.


Intel Corporation (NASDAQ:INTC) shares have dipped 6% in the last two days. Market whispers are making their way through the Street of Google’s security analyst team at Project Zero uncovering a silicon-level bug that impacts the CPU found in almost every latest computing device tech enthusiasts use today.

Oppenheimer analyst Rick Schafer notes that the chip maker’s team was “clear” that even if certain details were “vague,” INTC is not looking for “a financial or business impact” ensuing from this challenge; even as Wall Street gets skittish in the aftermath of the security issue.

As such, the analyst leaves his forecasts unchanged and remains firmly on the sidelines, reiterating a Perform rating on INTC stock without listing a price target. (To watch Schafer’s track record, click here)

“The fix is accomplished with software and firmware updates that will degrade performance on a workload-dependent basis. Intel management believes the performance impact will be a minimal <2% for the ‘average user’ but could be higher than 30% on ‘outlier’ workloads with high back and forth rates between an app and the OS. Future CPUs are expected to see a smaller performance impact as the adjustment will be employed at the silicon level,” highlights Schafer.

Worthy of note, while Intel’s vulnerabilities raise quite a stark short-term obstacle, they are solvable: “Reuters reported that one of the researchers who discovered the security issues believes the Intel-specific flaw is more serious near term, but more easily correctable, while the more broad-based issues are more difficult for hackers to penetrate, but could be a more difficult problem long term.”

The others Schafer refers to stems from Google’s blog post on the security matter, which not only impacts Intel, but also CPUs from AMD and ARM. “Net, while the development could impact Intel’s reputation with customers, we would caution against making positive read-throughs to AMD as its CPUs are also reportedly vulnerable and will likely require mitigating updates,” Schafer notes.

CPU performance will certainly take a hit contingent upon workload, which can show up from datacenter to PC applications. Schafer talks of “industry-wide” discussions to pinpoint what software, firmware as well as hardware updates down the line will be needed to address the problem at hand. The INTC team looks for fixes to start pedaling out in the next coming days, rolling out further throughout the coming weeks.

TipRanks shows a moderately optimistic analyst consensus backing this chip giant. Out of 25 analysts polled in the last 3 months, 16 are bullish on Intel stock, 7 remain sidelined, while 2 are bearish on the stock. With a return potential of nearly 6%, the stock’s consensus target price stands at $46.55.