Intel Stock Forecast : It Will Prosper Amidst The COVID-19 Pandemic

motek 1This Intel stock forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • The pandemic panic sell-off made Intel even more undervalued. Now is a great time to add more to your Intel position.
  • Yes, INTC is recovering but its still trading way below its January 20 high of $69.29.  If more investors regain their senses, INTC can breach $65 again soon.
  • The strong balance sheet should already convince investors that Intel has no serious headwind from COVID-19 quarantines. COVID-19 is actually a boost to Intel’s server business.
  • Unlike AMD, Intel has enough cash reserves to weather 30-day or even 90-day quarantine edits of many countries.
  • Having its own fabrication or factories makes Intel a better long-term investment than fabless semiconductor firms like AMD and NVDA. 

I added more Intel (INTC) shares when the price went below $50. The COVID-19 pandemic sell-off really made INTC more undervalued. Most investors panicked and never realized that Intel really has little difficulty in overcoming COVID-19 pandemic-induced quarantines. Unlike its peers in the semiconductor business, Intel has its own factories. It means there’s almost zero risk of disruption to the production cycle of its processors/flash storage products. 

INTC even went below $45 during the March Madness of COVID-19 panic. The high IQ of most investors went away because they got terrified of this new coronavirus plague. I already made profit from buying INTC went it went below $47. I still think INTC can breach $65 again before June. 

(Source: Seeking Alpha)

Intel’s Data Center Business Gets A Boost From COVID-19

COVID-19 is a tailwind for Intel’s $23.45 billion/year data center business. The mandatory stay-home edicts of many countries told me that data centers, server farms, online game platforms, and other cloud computing infrastructure operators need more high-priced Xeon and Intel server-grade SSD products. The work-from-home solutions of many companies to keep their employees safe from COVID-19 means there’s now a greater demand for Intel’s products. COVID-19 is bad for smartphone vendors but it is a tailwind for Intel’s DCG (Data Center Group). 

(Source: Statista)

Forget about EPYC, Xeon still reigns as the best processors to power online collaboration of corporate/government workers. Big and small companies will stay loyal to the Xeon brand for their on-premise and cloud server computers. 

Any thing that boosts DCG is a very strong reason to add more INTC shares. DCG is very profitable (48% perating margin) and is still growing. This can only mean that Intel still dictates its own server processor price tags without fear of losing customers. 

(Source: INTC)

The DCG segment’s revenue in Q4 2019 was $7.2 billion. I expect COVID-19 to help this segment deliver $7 billion for Q1 2020. 

The quarantines imposed by many countries is not preventing Intel from producing more of its best-selling processors. Intel has its own semiconductor factories. Intel is also cash-rich. It can lease its own fleet of airplanes, trucks, and container ships to deliver its products anywhere in the world. Processors and solid-state drives are small in sizes. They are easy to pack and transport in waterproof cases so they can survive getting sprayed on by anti-coronavirus disinfectants.

We hear or read about countries closing their borders to foreigners. However, that policy only covers human beings. No government will dare ban the entry of cross-country goods. There will be scrutinized more but international trade of goods will remain unhampered.  

Intel Stock Forecast: Strong Balance Sheet Made Intel Almost Invulnerable To Pandemics

It’s decades-long dominance in x86 desktop and server processors has helped Intel come up with a rock-solid balance sheet. The failure of Advanced Micro Devices (AMD) to disrupt Intel’s 98% grip on x86 server processors is largely why Intel touts more than $13 billion in cash & equivalents. This fat sum is in spite of Intel’s recent multi-billion acquisitions.  Cash is king in times of economic problems. Cash-rich companies can endure any prolonged pandemic. 

By having a fat sum of cash, Intel can easily weather COVID-19. Intel’s annual net income of more than $6 billion also helps it pour money into research. By spending more than $3 billion/quarter on research and development, Intel will keep coming up with the best desktop and server semiconductor products.

(Source: Ycharts)

Having a massive R&D budget is partly why Intel can still come up with 14-nanometer processors that outperforms 7-nanometer Ryzen processors. Big budget for R&D is why Intel’s upcoming Lakefield Core i5-L16G7 (1 10-nanometer + 4 cores of Tremont Atom processors) showed it can outperform against Qualcomm’s (QCOM) Snapdragon 835. 

My point is that the high profitability of Intel’s business allows it to outspend its rivals on research & development. The entity that comes up with better research will always come out on top. 

Conclusion

The only bad thing that Corona stock market context caused is that Intel has suspended its $20 billion share buyback program. It would have been a constant boost for INTC if Intel still pushes through with its plan to buy back $20 billion of shares within 15 to 18 months. I doubt if COVID-19 can also cause Intel to cut back on its dividend payments.

The thing is Intel has a very strong quarterly income/cash flow. I don’t see it ever announcing a reduction in its quarterly dividend payments. Intel shareholders will still get their $0.33 dividend on June. The COVID-19 pandemic will also stop Intel from raising its dividend payments. 

I am highly confident that INTC will again reach beyond $65. I Know First also positive stock market forecast over INTC. One year from now, we can expect INTC to trade well above its current price of $55. 49.

Current Intel Stock Forecast

Past Success With Intel Stock Predictions

I Know First stock algorithm has been bullish on Intel stock in past predictions. On October 30, 2019, the I Know First algorithm issued bullish predictions for Intel stock price. The algorithm successfully forecasted the movement of the INTC price. In 3 months, Intel stock price has risen by 18% in line with the I Know First algorithm’s forecast. See the chart below.

intel stock forecast chart

Here at I Know First, we have developed a algorithm that correctly forecasted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily market forecasts for currency predictionsgold price forecast. Additionally, we provide the latest Apple stock news and Apple stock forecasts, as well as the recently launched Corona stock picks. Today, we are producing daily forecasts for over 10,500 assets.

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