Why Intel Stock Is Sinking Today

Intel (NASDAQ: INTC) stock is losing ground in Tuesday's trading. The semiconductor company's share price was down 5.8% as of 2 p.m. ET.

Intel stock is losing ground today following skeptical coverage from Bank of America (BofA) analysts. The chip specialist's share price had climbed yesterday following news that CEO Pat Gelsinger would be resigning, but BofA's analysts raised concerns about the company's path going forward.

Bank of America's analysts see downside risk for Intel stock

Following the announcement that Pat Gelsinger would be resigning as Intel's CEO, Bank of America published a new round of coverage on the chip giant's stock. The firm's analysts maintained an underperform rating on Intel and a one-year price target of $21 per share on the stock. As of this writing, BofA's target on Intel implies a downside of roughly 6.5%.

What's next for Intel?

Given news of Gelsinger's departure, Bank of America's analysts think there is greater potential for Intel's business to be split into two separate components -- one focused on designing chips and the other on manufacturing them. As the only major company that both designs its own chips and operates a large-scale fabrication business, Intel occupies a unique space in the semiconductor industry.

On the one hand, with concerns that rising political tensions between the U.S. and China and other geopolitical dynamics could disrupt semiconductor supply chains, Intel's fabrication capabilities have put the company at the center of strategic initiatives to bolster domestic chip manufacturing capabilities.

On the other hand, the company is facing competitive pressures in the chip designing space and cost issues as it moves to scale its fabrication business to accommodate the potential influx of third-party customers. The question of what to do with Intel's business composition will be central to new leadership decisions and could significantly impact the stock's performance in the near term and long term.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.