Intel Appears Set to Break Higher
Intel Corporation (NASDAQ:INTC) is looking to mount an aggressive all-out attack on the rapidly growing artificial intelligence (AI) segment that promises to be the next major technological innovation for the decades ahead.
Faced with the alternative of a slow death from the deteriorating personal computer (PC) and legacy markets, Intel appears to finally understand the crux of the situation after witnessing the superlative moves in rivals Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) on the charts.
Just think about the developments in the technology space. No one talks about old legacy technologies, but they do talk about the massive technological capabilities for AI in numerous fields, such as the Internet of Things (IoT).
AI technology that enables machines to communicate with each other and carry out tasks more independently is the wave of the future. Simply look at the growth of autonomous vehicles and applications that demand advanced AI.
Intel has a war chest of about $17.0 billion in addition to funds held in overseas accounts, which President Donald Trump has signaled that he will make easier to repatriate. This move would allow Intel and other technology companies to spend big on innovation.
This Move Will Be a Game Changer for INTC Stock
The announcement by Intel that it is forming a new “Artificial Intelligence Products Group” (AIPG) was a game changing move that , in my view, could elevate INTC much higher.
The simple recognition of the critical importance of AI could prove to be the next big step forward for INTC stock that could finally see the stock break toward $40.00.
The new AIPG unit will combine technologies from Altera Corporation (NASDAQ:ALTR) (acquired by Intel for $16.7 billion in December 2015), Nervana Systems, Xeon, and Xeon Phi.
The acquisition of Nervana Systems is intriguing, as the AI company has developed a technology that makes chips much more powerful and a great fit for AI applications.
Intel is also acquiring Mobileye NV (NYSE:MBLY), a developer of widely used hardware and software AI technologies for vehicles, in a $15.3 billion deal. Mobileye represents the eyes behind a vehicle, whether driven by a person or autonomously and is an excellent addition for Intel.
Things appear to be coming together for Intel in the AI segment, which could drive the INTC stock price to break higher.
Intel stock has underperformed the S&P 500 over the past 52 weeks and is caught below a key resistance level at around $38.00, which was tested in October 2016 and January 2017.
Chart courtesy of StockCharts.com
If Intel stock can hold support at $33.00 to $34.30, I wouldn’t be surprised to see INTC stock break $38.00 again and move above $40.00. After this, how high the Intel share price rises would depend on the success of its AI unit, which would drive multiple expansions and a higher stock price.