Intel (INTC -9.20%) stock lost substantial ground in 2024's first day of trading. The company's share price closed out the daily session down 4.9%, according to data from S&P Global Market Intelligence.
While there wasn't any business-specific news pushing Intel stock down today, the company's valuation slipped amid some substantial developments. Most relevant to the company's performance outlook, news hit the wire that ASML had opted not to ship advanced chip-fabrication machines to China following pressure from the U.S. government. Additionally, Apple stock also lost ground after a ratings downgrade from a high-profile financial firm.
What does today's big news mean for Intel?
The chip industry has become a focal point in ongoing tensions between the U.S. and China. Having access to advanced semiconductor technologies is a vital national security interest for the competing world powers, and both countries are taking steps to bolster their competitive positioning in the space.
While moves to bolster the U.S.' strength in semiconductors will provide some tailwinds for Intel, the situation is enormously complex and comes with plenty of downside risks. Escalating tensions between the U.S. and China have the potential to be broadly destabilizing, and they could be particularly disastrous for the tech sector.
In addition to bearish momentum stemming from the news that ASML would halt shipments of its advanced lithography machines to China, tech stocks also tumbled after Barclays analyst Tim Long lowered the firm's rating on Apple stock from "neutral" to "underweight."
Long cited expectations for declining hardware performance and weakening in the tech giant's services segment as reasons for the downgrade. While Apple no longer relies on Intel for the central processing units (CPUs) used in its computers, the news of the downgrade triggered an uptick in bearish sentiment for the broader tech space.
Is Intel's stock sell-off a buying opportunity?
Even with today's sell-off, Intel stock is up roughly 81% over the last year. As a result, the company's valuation has been pushed up to much more growth-dependent levels.
INTC PE Ratio (Forward 1y) data by YCharts
Trading at roughly 25 times expected earnings for 2024, Intel is far removed from the bargain-level valuation that it was trading at 12 months ago. Additionally, there still haven't been many signs that its turnaround efforts are making big strides.
Intel's big gains have been largely powered by initiatives from the U.S. and other governments to promote domestic chip design and production -- as well as excitement surrounding the artificial intelligence and the broader semiconductor industry.
If these initiatives bear fruit and help the chip giant regain crucial performance and commercial edges, Intel stock could have another great year in 2024 and beyond. But investors should weigh the risks and the company's competitive positioning before going all-in on the stock.
