Intel Still Has Tricks In Its Bag, Despite Apple Pulling Out

Intel deemed 2020 as its Turnaround Year with an emphasis of focusing on its core competencies of personal computers and data center. Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. Intel also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors and other devices related to communications and computing.

Oh, I just noticed an error… Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. During Apple’s annual Worldwide Developers Conference yesterday, Tim Cook announced that the company was cutting ties with long-time supplier Intel and moving the design of chips for its new line of Mac computers in-house. Tim called the move a “game-changer” because now Apple can seamlessly integrate their hardware and software into all their devices on their terms.

This comes on the heels of Intel continuing to lead the market for desktop CPUs, but AMD incrementally increasing their share in the market. In November, AMD had 20% of the market vs. 16% in April of 2018. And in late April, AMD said it stole more market share from Intel for the 10th consecutive quarter and had more than 50% share of high-end CPU sales globally.

"Intel Inside" is a marketing phrase that just means that the computer that displays that phrase in advertisements has an Intel CPU inside. But PCs sales have been declining for many years, which is why Intel is trying to stay relevant by getting into the next secular trends.

Artificial Intelligence is essentially getting computers to think like humans in terms of cognitive abilities. Artificial intelligence is all about getting machines to react to suggestions or inputs in the way humans do with the goal of perform major tasks and solve problems without the need for human intervention.

In 2016, Intel in bought Nervana Systems. Nervana Systems is an artificial intelligence software company that provides a full-stack software-as-a-service platform called Nervana Cloud that enables businesses to develop custom deep learning software. Then earlier this year, Intel bought Habana Labs, an Israeli startup that develops chips for artificial intelligence applications.

But artificial intelligence is just one secular trend Intel has its eyes on.

Weston Twigg upgraded shares of Intel from Sector Weight to Overweight and assigned a price target of $82.
The company is focused on maximizing its opportunities beyond PC, delivering a broad set of solutions for the evolving drivers of compute such as edge computing, datacenter computing, AI/ML autonomous things and 5G-enabled computing, the analyst said.

"Intel is already focused on these steps, in our view, and if it executes well, it could stem share losses in core CPU markets and accelerate share gains in newer markets (IoT, GPU, edge), setting the Company up to outperform the broader semi industry over the next decade," Twigg said.

Notwithstanding fragmented competition, Intel has two distinct advantages over rivals, he said: in-house manufacturing, which creates a gross margin advantage and pricing lever, and high cash generation that can be used to fund R&D and acquire technology.

So where is price headed next, no where at the moment as price has been range bound for the past six weeks.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance