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Intel's chip problem may be a ‘tailwind’ for AMD, Nvidia sales: Analyst

Key Points
  • Mizuho Securities tells its clients Wednesday Intel's chip security issue will be a "marketing edge" for its competitors.
  • The firm's analyst notes Nvidia and AMD chips do not have the same vulnerability as Intel due to differences in architecture.
Nvidia co-founder and CEO Jensen Huang attends an event during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017.
Tyrone Siu | Reuters

AMD and Nvidia will benefit from Intel's chip security vulnerability and related performance issues, according to one Wall Street firm.

British tech website The Register reported Tuesday that some Intel processors have a "fundamental design flaw" and security vulnerability, which spurred the company to confirm the exploit later in the day.

Shares of AMD and Nvidia rose 5.2 percent and 6.6 percent, respectively, Wednesday, while Intel's stock declined 3.4 percent.

Mizuho Securities told its clients Wednesday Intel's chip security issue will be used by its competitors.

"Near-term, given some of the vulnerabilities on INTC processors, we believe AMD and NVDA could use it has a marketing edge given differing architectures and no vulnerability yet," analyst Vijay Rakesh wrote. "It could be a tailwind for AMD and NVDA which are not seeing similar issues because of a different architecture implementation."

AMD rose 6 percent and Nvidia rallied 1.5 percent, respectively, Thursday following the report, while Intel fell 4 percent.

Rakesh said Intel has 99 percent share in the data center processor market and roughly 80 percent share in the PC chip market. He downplayed Intel's assertion that the security issue will not have a big impact on its business as "optimistic."

The analyst noted in some special instances the impeding security patches for Intel chips could cause a decrease in performance of 20 to 30 percent.

"While INTC does not see a financial or market share impact from the security issue and performance degradation with the vulnerability, we believe its high performance customers might have a different take," he wrote. This is "a leg up for AMD and Nvidia. A difference in architecture implies less vulnerability as noted by AMD 'with near zero risk' and we believe [the same] for NVDA."

Rakesh maintained his buy ratings on AMD, Nvidia and Intel.