Intel Stock Forecast

The 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 is a great bet right now because its stock still trades below $50.
• Further, the upcoming release of 9^th Generation Coffee Lake processors can boost Intel’s topline and bottomline this year.
• These latest Intel processors are aimed at the high-margin enthusiast market. They are high-end processors aimed at PC gamers and multimedia artists/editors.
• They also won’t come with integrated Intel graphics accelerators. It’s a new strategy that differentiates it from AMD’s Ryzen tactic.
• If you are a gamer or a multimedia artist, you will understand that a PC processor without an integrated GPU is better because it was optimized for CPU-only tasks.

Intel (INTC) is still a huge part of my 2019 portfolio. I previously added more INTC last year when the stock was around $146. I firmly believe INTC is a bargain long-term investment because it still trades below $150. This global monopolistic company is currently trading at a bargain valuation of 10.33x Forward P/E. The stock is also -17.20% down from its 52-week high. INTC has obvious rebound potential. The average 12-month price target at Finviz for Intel’s stock is $54.34.

Source: Finviz

Going forward, the upcoming release of new octacore and hexacore enthusiast PC-level 9^th-gen Coffee Lake processors should help Intel improve its already-excellent 62.50% gross margins. It’s a no-brainer that Intel makes a lot more money selling high-end processors for the gaming and creative/workstation industries.

Consequently, better margins could lead to Intel having a better bottom line for the next four quarters. New processors that could potentially help Intel beat its Q3 2018 net income of $6.4 billion is an important thing to consider when evaluating the long-term investment return. I do insist that Intel remains a buy and hold forever investment. It remains a monopoly on x86 server processors and has more than 78% of the PC processor market.

Why Intel’s Stock Has Strong Upside Potential

Hedge fund managers will eventually realize that Intel will have a better year in 2019. Unlike last year which it had a hard time producing enough processors to meet market demand, I believe Intel will have enough factory capacity to satisfy its loyal PC OEM customers. In spite of the abundant supply of Ryzen processors from Advanced Micro Processors (AMD), OEMs were repeatedly complaining last year that they could not get enough Coffee Lake/Sky Lake processors for their computer products.

The bearishness over INTC on H2 2018 was Intel management’s fault. They were tardy in upgrading its fabrication factories to the 14-nanometer process for Coffee Lake-generation PC processors. For this fiscal year, Intel having enough production capacity will likely lead to it making record quarterly net income. If you think the $6.4 billion net income it made in Q3 2018 was already impressive, wait three quarters from now. My fearless forecast is that Intel can hit $7.5 billion in quarterly net income within the next 12 to 15 months.

(Source: MarketBeat)

Why Gamers/Creative Professionals Will Become More Loyal To Intel

Big spending gamers and graphic artists/content creators will love it that Intel’s upcoming new Coffee Lake processors are now without integrated graphics.Gamers and workstation PC-using artists/content creators know that processor without the handicap of integrated GPU is better because it was hardware coded to be CPU-optimized. As per AnandTech, these unannounced enthusiast processors from Intel are all sub-$500 retail products now listed on some online retailers.

The refreshed octacore Coffee Lake Core i9-9900K will be the most expensive at $488. PC vendor leader Asustek already unveiled last week its ProArt PA90 mini-PC which is powered by the said Core i9-9900K processor. The very compact ProArt PA90 is obviously geared at creative professionals/content creators but it could be a potent gaming machine because it can be equipped with the latest Quadro graphics accelerator cards from Nvidia (NVDA).

(Source: Business Wire)

Conclusion

It is high time for small savvy retail investors to go long on INTC before the hedge fund managers start herd-accumulating the shares again. Sad but true, leading PC companies like Asus still ignore the high-end versions of Ryzen processors. The permanent dependency of PC OEMs on high-end Intel processors is why I will keep adding shares. Yes, AMD is taking market share on PC processors but its probably on the low-end and mid-range categories of processors. Intel has an invulnerable moat on server and high-end/workstation PC processors.

Intel’s Coffee Lake, still at 14-nm, remains the permanent default processors on shipped laptops/computers made by OEMs (original equipment manufacturers). It is very hard to see any commercially successful workstation PC which does not have Intel Inside.

My buy rating for INTC is in line with its slightly bullish one-year algorithmic forecast from I Know First.

How to interpret this diagram

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.

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