Intel Stock Forecast (NASDAQ: INTC): Intel’s Latest Mobile Processors Should Mitigate Threat From AMD

Intel Stock Forecast

motek 1The 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:

  • Intel has unveiled its connectivity-focused 8th-generation processors for laptop and 2-in-1 notebook/tablet products. They should help address the rising threat from AMD.
  • More laptops/tablets/2-in-1s are shipped out annually. Intel therefore has compelling reasons to keep competitive against AMD’s Ryzen Pro mobile processors.
  • Intel’s Whiskey Lake-U and Amber Lake can offer up to 16 hours battery life. They come with integrated gigabit Wi-Fi or LTE connectivity, and Thunderbolt 3 and Optane memory support.
  • An LTE-enabled 5W dual-core Amber Lake-Y should be perfect for Microsoft’s dying Cellular PC campaign. It certainly can compete against Qualcomm’s Snapdragon 850.
  • I Know First has slight negative near-term Intel Stock Forecast. I still believe this stock is a good buy for long-term investors who value solid fundamentals/moat of Intel.

There’s a dark cloud of negativity over Intel’s (INTC). I, on the other hand, reiterate my buy rating for INTC. I am not worried about the postponement of Intel’s mass production of 10-nm processors to 2019. Today’s launch of the “optimized for connectivity” 8th-generation laptop/tablet processors Whiskey Lake-U and Amber Lake-Y confirmed Intel can still produce competitive 14-nm processors.

Whiskey Lake-U and Amber Lake-Y can help Original Equipment Manufacturers (OEMs) deliver laptops and tablets/2-in-1 notebooks with 16 hours battery life and support for Thunderbolt 3 and Intel Optane memory.

(Source: Intel)

Whiskey Lake-U and Amber Lake-Y can help Intel retain its estimated 79% market share in actively used processors. Intel also touts 84.79% share in CPUs used inside Steam users’ gaming computers. Intel coming up with better mobile processors should ensure the company’s long-running dominance in gaming laptops. All the top ten best gaming laptops use Intel Core i7 mobile processors.

Intel’s persistent 80% or more share in overall x86 desktop/laptop/gaming PC processors should convince investors to be more optimistic. The much lower forward P/E and Price/Book ratio valuation of INTC versus AMD will eventually correct. Intel generates far more revenue and net income than AMD. Study the comparative chart below. Intel is obviously out-of-favor from leading market movers (institutional/hedge fund managers) who decided to rally around AMD.

I have no solid evidence but I suspect clever speculators are again boosting AMD to stratospheric valuation. I decided to most of our AMD stake (at $23 to $25 price range) and bought more INTC at below $49. It’s a good pair trade – unload AMD while it trades above $24 and use the money to buy more Intel shares.

Partner Loyalty Comes From Supplying Powerful Yet Energy-Efficient Mobile Processors

In spite of the best efforts of AMD, Intel continues to tout the fastest laptop/mobile processors. The top Whiskey Lake-U Core i7 and Core i5 models should help continue this trend. The 15-Watt TDP of a Whiskey Lake-U quad-core Core i7 should convince Microsoft (MSFT), Apple (AAPL), Dell, HP, Inc. (HPQ) and Lenovo (LNVGY) to remain loyal to Intel. Laptop/mobile processors are under Intel’s biggest revenue generator, Client Computing Group or CCG. CCG is a $8.7 billion/quarter (as of Q2 2018) segment that need utmost protection from ARM-based processors and x86 Ryzen CPUs.

(Source: AnandTech/Intel)

My fearless forecast is that Apple will keep using Intel processors for its next-generation of MacBook/Macbook Pro, iMac, Mac Mini, and Mac Pro products. It has been more than 12 years since Apple switched to exclusively using Intel processors for its macOS computers. I bet this will extend to the next 12 years.

Future gaming laptops should also remain faithful to the Intel brand. Microsoft will likely continue to use Intel processors for its high-end Surface Book and Surface Pro products. The very energy-efficient 5-watt, dual-core Amber Lake-Y series of processors should keep small and large builder/vendors of Windows, Chrome, and dual-boot Windows/Android tablet manufacturers to keep on using Intel processors.

As far as I know, nobody is using AMD Ryzen for Chromebooks/Chomebox PC products, or dual-boot Android/Windows 2-in-1 notebooks and tablet computers. Intel keeping its near-monopoly on Chromebooks and dual-boot tablets can keep it way ahead of AMD.

Why Updated Intel Mobile Processors Are Critical

Far more laptops, 2-in-1 notebooks, and tablets are sold annually than desktop computers. It is therefore very important for Intel to keep competitive against Ryzen Pro APU/mobile processors from Advanced Micro Devices (AMD). As per the chart of Statista, only 97.8 million desktop PCs were shipped out last year. This is way below the estimated 160.9 million of laptops/notebooks that were shipped out in 2017.

(Source: Statista)

Retaining its status as the runaway leader in x86 laptop processors keeps Intel’s CCG segment profitable. Unless AMD sells its Ryzen Pro processors at deep discount (or net loss), I don’t see Whiskey Lake-U and Amber Lake-Y having a hard time in the market. Laptop OEMs will still likely use Ryzen Pro processors in less than 15% of their product line.

Conclusion

By coming up with regularly updated and improved processors, Intel can ensure the loyalty of its desktop/laptop OEM partners. Like it or not, AMD will continue to hold less than 30% of the overall PC processor market. I opine that Intel is slow-dragging its 10-nanometer processor process/manufacturing timetable. Intel is super-confident its 14-nm++ processors will still greatly outsell 12-nanometer Ryzen desktop/mobile processors.

This level of management confidence is why we should stay long INTC. I Know First has slightly negative 1-month and 3-month Intel stock forecast. However, I still reiterate a buy rating for Intel. Intel could hit $55 or $60 by January or February 2019 – right after industry watchers report over Q4 PC sales.  I’m 80% sure Intel will again finish 2018 with 75% plus market share in desktop/laptop processors.

Past I Know First Forecast Success with INTC

I Know First has been bullish on Intel shares in past forecasts. On August 29, 2017, I wrote about Intel another article where I said that getting involved in the cryptocurrency mining hardware market might just boost INTC’s price like it did with AMD and NVDA at that time.

Since then, Intel shares have risen 43.53% in line with the I Know First algorithm’s 1 year forecast. See chart below.

This bullish Intel Stock Forecast was sent to I Know First subscribers on on August 29, 2017.

Please note-for trading decisions use the most recent forecast.

To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplification explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Intel stock forecast


Intel stock forecast