Why Intel Stock Just Fell Again
Key Points
Intel is caught in a global chip-sector sell-off that has pushed semiconductor stocks more than 20% below recent highs.
Growing doubts about whether massive AI infrastructure spending will generate real returns are fueling investor anxiety across the chip industry.
Shares of Intel Corporation (NASDAQ: INTC) were down 5.6% as of 2:55 p.m. ET Tuesday. The S&P 500 gained 0.3% while the Nasdaq Composite was down 0.1%.
Intel stock is caught in a sectorwide sell-off that has stretched across Asia, Europe, and the U.S.
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The sell-off is being fueled by fresh doubts about whether the money going into AI infrastructure will ever earn a return, as well as a Federal Reserve decision this week that some think could surprise investors.
Why chip stocks have fallen into a bear market
Chip stocks were setting records just weeks ago, but now sit more than 20% below those highs, putting the sector in a bear market.
Much of this is fueled by anxieties around AI spending. Investors are increasingly wary of the enormous sums being spent on AI data centers and are questioning whether the massive capex will translate to real returns -- and if they do, when.
Nvidia fell nearly 5% on Monday and lost its spot as the world's most valuable public company to Apple the same day.
China's lithography breakthrough is spooking investors
Additionally, a Chinese state-backed company has reportedly begun mass-producing an immersion DUV lithography tool -- the critical machines that print circuit patterns onto silicon wafers. The market has been functionally monopolized by ASML, and the report spooked investors, wondering what it could mean for chipmakers downstream of ASML, including Intel.
Image source: Getty Images
The Fed's rate decision adds to the uncertainty
Sitting on top of all this is the Fed's rate decision on Wednesday. Under the new Chair, Kevin Warsh, investors are more in the dark than they are used to, and some key players, including Citadel Securities, believe a rate hike is in store.
Is Intel stock a buy right now?
I do believe in Intel long term, but I think the stock has run a bit too far and things are too rocky at the moment for my taste. I would wait to see how things play out.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, and Nvidia. The Motley Fool has a disclosure policy.