Those Betting Against Intel Stock Now Could Be Kicking Themselves Later
What does the new year hold for Intel Corporation (NASDAQ:INTC)? The 2016 forecast for Intel stock is bullish. The world leader in PC processors is set to continue its strong trend along with other tech stocks in the markets on the back of new products and a slick advertising strategy.
Last September in Berlin, Intel hosted one of its most significant product launches in years at the prestigious IFA, announcing 28 new solutions to address every computing segment. (Source: Matt Smith, “Intel’s Massive 6th-GEN Line-Up Debuts at IFA 2015,” Digital Trends, September 1, 2015.). IFA (Internationale Funkaustellung) in Berlin is the global tradeshow for consumer electronics and home appliances where the latest products and innovations are introduced in the heart of Europe‘s most important regional market.
That’s just the beginning. More is coming over the next months, addressing CPU, gaming, and the Next Unit of Computing (NUC) low consumption needs. Shareholders of INTC stock have taken note, considering that after it reached a low on August 25, as shares fell to $26.03, Intel stock has gone up. The company’s pace of innovation can only enhance this trend.
Shares have since reached the highs seen in July, with a marked improvement almost touching the $30.00 mark. Then as the steady stream of news of new processors and solutions started to flow, Intel stock gained $3.26, reaching $31.74 in a matter of weeks and then hitting a three-month high of $33.06. Intel shares are clearly heading toward the 52-week high of $37.03 and beyond.
Chart courtesy of StockCharts.com
Intel Stock Poised for Big Gains in 2016
Intel stock’s performance over the summer suffered as part of the bearish sentiment affecting the NASDAQ technology sector as a whole. Intel’s shares, facing a bear market, was too often influenced and driven by external news that hijacked its real value under the volatility storm. Almost all securities were affected, with Apple Inc. (NASDAQ:AAPL) in the lead.
Still, companies like Intel and Microsoft Corporation (NASDAQ:MSFT) have enjoyed a better run than most in 2015. If the past few weeks are any indication, the trend leveraged by solid product innovation point to 2016 being a vintage year. Such a combination of conditions is rare. For now, being bullish on Intel stock is advisable even if external factors are still affecting the markets.
Surely, Intel has not yet fully benefited from this favorable period which gives it the time to mature and easily beat its 52-week high. The likelihood of a strong market reception for its new products is high, which could push the stock well beyond the $40.00 mark reached in November 2014. With that, it would hit $50.00, gaining 65% to 70% over the current price.
Intel stock could even double. In 2015, the company expressed interest in the world of drones, in particular in applications related to high-definition cameras such as the ones featured on the latest drones in partnership with Qualcomm. (Source: Barb Darrow, “Intel pours $60 million into drone maker,” Fortune, August 28, 2015.) The Intel-Qualcomm collaboration led to the development of RealSense Cameras. It is a company that must keep pace with the times, if not determine them.
President Obama announced that U.S. troops would stay in Afghanistan for at least another year (a move likely to be echoed by other Western leaders). With this the use of drones can only increase, pushing the need for new technology.
Intel Stock’s “Carpe Diem” Moment
Investors can rely on the fact that Intel has demonstrated the ability to seize the moment and get back in the saddle, having learned from the stagnation that affected performance in 2012-2013, when Intel shares were trading at $20.12. The fact that INTC stock burst well above $33.00 is an encouraging fact that investors should consider as a call to action.
Intel is about to launch its first 14 nm processors to succeed the Skylake. These new chips, still 14 nm, would bear the name “Kady Lake” following these up in 2017 with the Cannonlake. (Source: “Intel roadmap reveals 10nm Cannonlake and Skylake-E for 2016”, Gamespot, last accessed October 19, 2015.) According to rumors gathered from an Intel engineer, Cannonlake will create a new standard from the current Quad-Core 8.6 Core solutions as based on price range.
Cannonlake is the first family of system On chip (SOC) that Intel will develop using a 10-nanometer manufacturing process, allowing for the continuous optimization of performance (including graphics) and energy consumption (and heat dissipation). When the technology is optimized for desktop processors, it could be coupled to hyper-threading, creating a chip capable of revolutionizing the mainstream desktop market. (Source: Hassan Mujtaba, “Intel’s Cannonlake 10nm Microarchitecture is Due For 2016 – Compatible On Union Bay With Union Point PCH,” WCCF Tech. Last accessed Oct. 19, 2015.)
Intel’s Slick Advertising Campaign Could Be a Winner
Intel and Microsoft have joined three PC manufacturers to launch a new advertising campaign designed to raise potential buyers’ awareness of what a new PC is capable of doing. The campaign’s slogan is “PC Does What?” to be featured in all media including TV, print, and online ads. (Source: Eli Blumenthal, “Microsoft, Intel unite PC makers in campaign to boost sales,” USA Today, October 16, 2015.)
It is the first time that all of these companies are working together in a joint advertising effort in order to bring the PC back from stagnation. Intel and Microsoft typically fund joint ad campaigns because they draw higher profits than do the vendors producing the actual PC.
The advertising campaign will deploy in the U.S. and China. Their idea is to show that new PCs are far more capable than machines that customers are using at home or at work. As it introduced its latest generation of processors a few weeks ago, Intel explained that more than 500 million computers currently in use are between four and five years old or even older, highlighting the advantages of its new microarchitecture.
These include increased performance, longer battery life, and better graphics than a typical computer five years ago. The new ad campaign borrows from Apple in that it will be imaginative and present the new technology in appealing and entertaining ways to the benefit of sales and Intel stock price.