Why Intel Stock Is Falling Today

Intel (INTC -3.38%) stock price was down by 2.9% as of 3 p.m. ET Monday, even as the S&P 500 index was up by 0.5% and the Nasdaq Composite had gained 1% for the day. The chipmaker's decline appears to be linked to an article published late Friday by The Wall Street Journal that highlighted the challenges facing the company. The pullback for the stock looks even more significant because most major chip stocks were rallying Monday after Foxconn's fourth-quarter report arrived with bullish indicators for the artificial intelligence (AI) market. Is Intel getting left in the dust? After the market closed on Friday, The Wall Street Journal published an article by technology writer Christopher Mims titled "Intel's Problems Are Even Worse Than You've Heard." In it, he highlighted the company's declining market share in semiconductors and the challenges to its traditional sources of profitability. The columnist painted a bleak picture of Intel's competitive position -- noting that it faced competition from disruptive innovators including Nvidia, ascending rivals such as AMD, and smaller challengers. He also noted that Intel was facing pressures from Microsoft, a partner that has been crucial to its ability to maintain strength in the personal computing and business computing spaces. In particular, Mims sees AMD making huge inroads into Intel's core markets -- and he noted that AMD actually generated more sales in the increasingly crucial data center segment last quarter. What comes next for Intel? While Friday's article focused mostly on Intel's chip design business, the performance of its fabrication segment will also be important when it comes to shaping stock performance. Intel is the world's third-largest chip fabrication company, behind Taiwan Semiconductor Manufacturing and Samsung. On the other hand, Intel's fab performance is significantly behind TSMC's, and it has been missing key benchmarks. The company opted to skip using its 20A fabrication node, and early indications suggest that its 18A process node may not be a winner either. If so, that would be a huge setback for the company. Under former CEO Pat Gelsinger, the 18A process node had been positioned as central to the company's strategy in the fabrication space as well as its overall growth strategy. With Intel facing pressures in its design and fabrication businesses, its stock has fallen by roughly 57% over the last year. Its current beaten-down valuation could help set the stage for a strong comeback, but if it's going to regain the confidence of investors, Intel will need to present a convincing path forward and deliver some reassuring signs of solid execution.