Intel Fires off a Warning Shot to Rivals
Patient supporters of Intel Corporation (NASDAQ:INTC) may soon be rewarded after watching chip rivals NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) attract all of the glory on Wall Street and Main Street.
Now, I know that Intel stock has underperformed and under-delivered since it was a Wall Street star back when the personal computer (PC) was front and center, but things seem different this time around.
INTC stock has moved back to a multi-year top around $38.00, and it’s showing decent signs of finally taking out this key resistance level.
Two Factors Could Lift INTC Stock
There were two recent major developments that support a possible breakout for Intel stock.
The company introduced its “8th Generation Intel Core” chip, which is said to be 25% faster than previous versions for gaming. This is huge, and is exactly what Intel needs at a time when everyone has been talking about AMD and NVIDIA.
The new chip, which is to be available on October 8, could be a big challenge to the fast “Radeon” chips made by AMD, especially in the area of gaming and the massive growth segments of artificial intelligence (AI) and machine learning.
If the Intel chip is as fast as suggested, there could be a shift in the demand for gamers to upgrade their NVIDIA graphics cards. But, what I’m anxious to see is the role of the new chips in AI applications, which will continue to be a major focal point for Intel.
Also surfacing are rumors that Tesla Inc (NASDAQ:TSLA) is looking at selecting the Intel chip over NVIDIA for powering its vehicles’ large-screen infotainment systems. The computerized brain behind Tesla vehicles requires a reliable and speedy chip, so hats off to Intel if it comes to fruition.
Intel is also just completing the purchase of the remaining shares of vision-sensing technology company Mobileye NV (NYSE:MBLY). The acquisition will power Intel’s presence in the area of autonomous vehicles, as well as give a boost to the advanced applications within Intel’s “Artificial Intelligence Products Group.”
INTC stock has underperformed, with a small move of less than five percent year-to-date versus 12% for AMD and a whopping 67% for NVIDIA.
Yet, there is hope, albeit it will not be easy; it’s not like AMD and NVIDIA will be sitting around waiting to be challenged.
Fundamentally, we are seeing higher earnings revisions over the last 90 days for Intel.
The INTC stock chart shows the recent bottom at $33.46 in early July. In the weeks that followed, the stock attracted more buying volume, which is a bullish sign that helps support the current rally.
Chart courtesy of StockCharts.com
Intel stock is looking at taking another shot at finally breaking above $39.
Trading as cheap as 11 times its high estimate in 2018, Intel looks ripe for a breakout and, if things pan out for the chip and other AI initiatives, we could see the stock jump 50% based on a much-deserved multiple expansion.