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It's no longer the days of tech bubble and the market for personal computers is now in decline. This means that any company with close ties to PCs as a major source of revenue is in trouble. On this list is Intel, which finds itself behind market leaders Qualcomm and ARM Holdings in the new age of mobile devices. But while two-thirds of Intel's revenue still comes from PC-related chips, this is a company that still has considerable value. And with fourth-quarter revenue arriving at $13.4 billion or the midpoint of its guidance, the company's efforts are beginning to work.
Despite the less than 1% miss on revenue, things are coming together. And in many respects, Intel is now suffering from poor sentiment – the same issue that is affecting Apple. But despite Intel's perceived inability to compete, the stock is not going to zero. Besides, it's not as if the mobile devices market is suddenly saturated. Intel has plenty of time. That's not to dismiss the company's many challenges and the ground it needs to make up. And if Intel is not careful, it will be surpassed by a once-fallen rival such as NVIDIA, which is making a resurgence.
The good news is that Intel no longer appears too slow to respond. Its recent earnings report shows an increase in research and development spending. Now bears want to point out that the company's expenses are high. But Intel is fighting for market share. We can't have it both ways. That R&D expenses jumped 14% year-over-year should be a welcomed signal that Intel is not resting on its hands.
Couple this with the possibility that Intel can gain some design wins in up-coming Apple products, plus its current share-buyback program; a case can be made why Intel is still one of the cheapest stocks on the market. Plus, the company is sending a clear message that it believes in its business and more importantly, its future. Investors would be wise to jump all over this opportunity. With limited downside risk, this is the biggest “no-brainer” on the market at the moment.
