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Company intel (INTC) is the largest producer of chips in the world. It designs and manufactures microprocessors for the global personal computer and data center markets. The company has gradually reduced its reliance on PCs by turning to data-centric businesses such as artificial intelligence and autonomous driving.
Last year, its data-centric businesses accounted for 48.6% of its revenue. This indicates that its data activity is generating close to what PC activity is doing. Growth in its data business is expected to continue and even outpace its PC business in the coming years. But we cannot forget that the INTC still holds a dominant market share for microprocessors in the consumer and business markets.
With the future in mind, the company is focused on the data center and the cloud, where management aims to maintain market share and increase profitability. This has led to investing in the Internet of Things (IoT), memory and storage.
In terms of chips, INTC is now focusing on a product line that targets different segments of the market. As its high-end business in developed economies shows momentum, the company is looking to enter more device categories.
As more and more information is stored in the cloud, there is a demand for a new generation of chips like the one provided by Intel. These chips are more efficient in terms of cost and power, and INTC now offers more integrated solutions that should be competitive in terms of cost per watt.
For example, the company’s investments in field-programmable door arrays for acceleration and memory to reduce latency and increase speeds are helping it develop custom solutions for the best customers. The acquisitions of Altera and eASIC have also helped to strengthen its position in the networks segment.
The Internet of Things market is expected to experience strong growth over the next few years, and INTC is in a strong position due to its focus on providing not only chips, but associated hardware. The INTC generated $ 3 billion from IoT in 2020 and continues to introduce new products. The company has also made strategic acquisitions to expand its portfolio and strengthen its position in this segment.
INTC is also benefiting from an improving trend in PC shipments. As the remote work wave does not seem to have an end in sight, Intel is expected to benefit from higher demand for its 11th generation processors based on the 10 nanometer SuperFin process against a backdrop of robust and continued growth in the market for PC.
Intel’s 2017 acquisition of autonomous vehicle technology provider Mobileye was also a big positive for the company. The acquisition helped INTC enter the self-driving car technology market. The company has access to Mobileye’s technologies, including in-vehicle networks, sensor chips, road mapping, machine learning and data management.
INTC profits increased 12.3% year over year in second quarter, driven by its PC business and a strong recovery in the Internet of Things business and the business portion of the hubs segment of data. Intel also recently announced the creation of Intel Foundry Services. The foundry is a huge opportunity with an addressable market estimated at $ 100 billion by 2025.
The company has an overall rating of A, resulting in a strong buy rating in our POWR rating system. INTC has a value rating of A as the stock appears to be quite undervalued. For example, INTC has a trailing P / E of only 11.98 and a forward P / E of 12.42. These are pretty low numbers for a chip stock. Moreover, when you consider analysts’ price targets, INTC is undervalued by up to 56.8%.
The company also has a quality rating of B due to a strong balance sheet. At the end of the most recent quarter, INTC had $ 24.9 billion in cash, compared to just $ 3.7 billion in short-term debt. We also provide Growth, Momentum, Stability, and Sentiment ratings for INTC, which you can find here.
INTC is ranked # 8 in the B-rated wireless semiconductor and chip industry. You can find other top stocks in this industry by click here.
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INTC stock was trading at $ 54.16 per share on Tuesday afternoon, up $ 0.22 (+ 0.41%). Year-to-date, INTC has gained 11.41%, compared to a 21.62% gain in the benchmark S&P 500 over the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the chief value strategist for StockNews.com and the publisher of the POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services firms, hedge funds and online publications. David enjoys researching and writing about stocks and markets. It takes a fundamental quantitative approach in evaluating stocks for readers. Following…