One Great Reason Why Intel is Poised for a Breakout

While the slowdown in PC sales has negatively affected many stocks in the industry over the last 12 months, Intel (INTC) has managed to stay immune from this slowdown. Although Intel’s shares have depreciated 1.2% over the last 12 months, the company has managed to outperform many of the stocks in the industry.

Intel has diversified its revenue stream and that protected the company from decline in PC shipments. This fact is evident by the company’s Q3 earnings report. Intel’s Q3 EPS of $0.64 was $0.05 ahead of the consensus estimate of $0.59.
As for top-line, revenue for the quarter came in at $14.5 billion, $0.28 billion better than the consensus estimate of $14.22 billion.

Intel’s Future Growth plans

Over the past few quarters, Intel has endured declining sales and earnings. This has happened primarily due to two reasons– slow PC sales and big mobile subsidies. To expand its market away from those two hard-hitting markets, the company is focusing on data center, Internet of Things, and non-volatile memory business which showed double-digit growth in previous quarter.

Intel doesn’t have a strong presence in mobile chips segment. Therefore, the company plans to introduce various products comprising smart alliances, wearables, and connected cars, based on Internet of Things (IoT) market with tiny new components like Curie. All data flows from Internet of Things devices and PCs to data centers, where Intel relishes a proximate-monopoly in the segment of chips.

Earlier this year, Intel acquired Altera—manufacturer of reprogrammable chips—for $16.7 billion. Many companies are looking for server chips that are enhanced for industry-specific jobs and this propelled Intel into acquiring Altera. Intel with the combination of its own server chips, Saffron’s AI platform, and Altera’s FPGA’s can deliver its clients a complete package of data centre solution that gives it the upper hand against its robust competitors.

Altera chips are used in a variety of markets, ranging from communications to consumer electronics. Altera’s devices can have their function updated, even after they’ve been installed in end-devices. The company also acquired Altera due to its customer base. Intel has been trying to find more customers for its factory network and the acquisition served that purpose nicely.


PC sales are still declining, however Intel has managed to offset the downfall by diversifying its revenue stream. The acquisition of Altera will add to the company’s earnings within six months and also gives the company a huge client base for its existing factory network. Although the stock has remained flat over the last 12 months, I expect it to slowly rise to $40 in the next fifteen months. Buying Altera was just a start as Intel will continue diversifying its business. For these reasons, I think investors can still buy Intel.
Published on Nov 18, 2015
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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