Why Intel Stock Could Reach $70.00

intel stock
Credit: iStock.com/phongphan5922

Intel Breakout Targets Higher Prices

This has been the year for the return of the old legacy technology stocks, many of which were caught in a comatose trading channel for years prior to their resurrection.

We saw breakouts in Microsoft Corporation (NASDAQ: MSFT) and Cisco Systems, Inc. (NASDAQ: CSCO) after being dead money for years, and the latest to join the old-timers’ party is Intel Corporation (NASDAQ: INTC).

After being left in the legacy technology scrap pile for failing to innovate in the new-generation technologies like mobile, cloud, and artificial intelligence (AI), Intel stock appears to be finally breaking out from its former shell and joining the party.

INTC stock broke above the key multi-year $40.00 resistance level on October 10 and established a new 10-year high of $47.30 on November 3. The breakout appears to be sustainable and accompanied by an upside trading gap, which is generally a bullish signal for extended gains when associated with higher volume.

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intel stock chart

Chart courtesy of StockCharts.com

I have been following Intel for about two decades, so the breakout was much welcomed.

Also Read3 Reasons Intel Stock Could Grow in 2017

Now, maybe the fact that Intel chips are found in about half of the “iPhones” made by Apple Inc. (NASDAQ:AAPL) has helped drive INTC stock, but the enthusiasm is also likely due to the company’s increased focus on AI technologies and more powerful chips.

INTC stock is up 27% this year but is still well-off from its glory days in early 2000 when the share price was just under $80.00. I’m not sure if this stock will ever recapture its high price, but the company appears to be on the right path.

Why INTC Stock Is Primed for Take-Off

Generating close to $23.0 billion in operating cash flow and $8.03 billion in levered free cash flow over the trailing 12 months, Intel has the capital to capitalize on its strategy.

The rapidly growing area of AI technologies will be a key focal point for Intel over the next decade.

The company’s “8th Generation Intel Core” chip is proving to be a game changer in the AI and Internet of Things (IoT) segments as the company battles NVIDIA Corporation (NASDAQ: NVDA) and Advanced Micro Devices, Inc. (NASDAQ: AMD).

In the mobile telecommunications space, Intel is at the forefront of 4G technologies and just announced its initial 5G modem.

In my view, the move to 5G will be massive and Intel is in the right place with products along the 5G spectrum.

Analyst Take: 

The breakout at $40.00 by INTC stock was bullish and the subsequent ability to hold the move is positive.

Over the last 23 sessions to November 16, 15 sessions were characterized by positive buy volume, which is what you want to see in an uptrending stock like Intel.

intel price chart

Chart courtesy of StockCharts.com

While the technical picture points to higher moves, the fact that Intel stock still only trades at 14.17 times its 2018 consensus EPS is underpricing the stock.

Intel stock deserves a higher multiple, especially if it can deliver in its non-legacy areas.

Investors are cautiously waiting for this and we can see INTC stock move up another 50% towards $70.00 if it executes.