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Intel and Apple: What's Next?

Carla Olson | 4:13 pm ET, 03 Apr 2018

Intel’s (NASDAQ:INTC) stock price witnessed a big decline yesterday after Bloomberg reported that Apple would not use Intel chips for its Mac computers. As a part of the multi-step transition, Intel processors will be replaced by native Apple components starting 2020.

Apple did not respond to the ‘news’ and Intel denied acknowledging this as well.  Apart from Intel, its rivals such as Qualcomm, Broadcom, and Arms supply Apple with chips and processors. These are used for various purposes such as artificial intelligence and augmented reality — in addition to in-house chips for Macs, Apple Watches, AirPods, and Beats.

If Apple opts for its own chips instead of other manufacturers’, it will eliminate the critical dependency on the new chip models. It could soon stand out from the competition as the only PC and electronics maker utilizing its own processors.

The Kalamata code is in its initial developmental stage. It is a part of the larger strategy that aims at enabling Apple devices (Macs, iPhones, and iPads) to work in a similar and coordinated way.

This step is a major setback for Intel. The partnership between the two companies has caused the revival of Apple’s Macs and it also helped Intel get to a leading position in the electronics marketplace.

Intel's ability to produce powerful processors compared to its competitors through the use of the latest manufacturing technology has cemented its #1 position on the market.

Will the INTC stock price recover?  Per Finstead research, Intel's average analyst price target is $52, which is close to its current price. The upside is very small.

Intel has a fairly low valuation compared to its peers and lags behind its rivals QCOMCHKPTXNAMD, and NVDA.

Investors should consider a couple of points to estimate the impact of Bloomberg’s claim on Intel’s business going forward:

  • Bloomberg indicated that Apple makes up only 5% of Intel’s total revenue 
  • Apple held 7.6% market share for PC units in the most recent quarter, based on Gartner research.

Perhaps you should wait and see at this critical juncture until things fully play out.  

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Lam Research (LRCX): Can The Stock Price Run Sustain?

Carla Olson | 3:18 pm ET, 22 Mar 2018

LRCX is down 3% today, but it witnessed a 19% stock price hike in the past 12 weeks. The wafer fabrication company has succeeded in keeping up the interest of its shareholders since the past year.

Why are investors bullish about LRCX?

The products manufactured by LRCX are viewed as the essentials for the semiconductor industry. 

Semiconductor equipment companies should show double-digit growth year-on-year.

Companies with exposure to memory chip production should benefit from continued growth in memory demand.

In the coming 5 years, LRCX has devised a plan to return 50% of free cash flow to stockholders and raise its quarterly dividend to $1.10 per share (a 120% increase from June 2018).

Besides this, a $2 billion share repurchase program will start in the next 12-18 months.

What do the bears say?

While the semiconductor equipment industry is forecast to grow double-digit in 2018, growth will only be a quarter of the growth exhibited in 2017.

According to Finstead Research, LRCX’s average price target is $246.  There is a 10% upside (go to Finstead.com and type “LRCX upside” to get the latest figures).

The valuation of LRCX is lowest among its peers.

LRCX has a high Short Share of Float compared to the average for the industry, which is an indication of high volatility in the upcoming period.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Intel Corporation (INTC) Buy or Sell Stock Guide

Updated at: 5:19 pm ET, 24 Dec 2018

The analysis below may be helpful to you if you have any of the following questions about INTC stock:

  • Is INTC a buy or a sell?
  • Should I sell or hold INTC stock today?
  • Is INTC a good buy / a good investment?
  • What are INTC analyst opinions, recommendations, ratings?

Here are INTC stock buy reasons/signals:

1. Intel is the largest semiconductor company in the world. The firm has sustained its position at the forefront of technology by investing heavily in R&D, and this trend should continue.

2. The firm holds a roughly four-fifths share in the microprocessor market.

3. The data center group has indirectly benefited from the proliferation of mobile devices. Server processor sales will be the main driver of growth in the near future.

4. Management strategy has evolved with the changing times. The primary focus area at the moment is the data center and cloud, where Intel is doing everything possible to maintain its market share and profitability. Supporting this is continued investment in the Internet of Things (IoT) and non volatile memory/storage (memory is closely associated with processing speeds and it also helps increase penetration at customers).

5. We are particularly optimistic about the data center business. The drive to lower-cost computing devices is increasing the pressure on servers that are taking the load off these devices. As more information in various structures and formats are increasingly stored in the cloud, there is demand for a new breed of chips that are more efficient in terms of cost and energy but may not pack in quite as much compute power as in the past.

6. Intel’s non-volatile memory business is poised to take off. While NVM has fairly broad application across markets, the company is primarily targeting enterprise/data center customers to drive penetration of this high-margin segment. The company tied up with Micron to develop new memory technologies back in 2006.

7. Intel is the unquestioned leader in the microprocessor market, remaining number one in terms of market share and product performance. The company has focused on selling not just separate components but platforms optimized for specific markets, whether mobile, enterprise, or the digital home. Intel’s innovative efforts are speeding up the entire computer, and not just the central processing unit (CPU).

8. Intel's acquisition of Israel-based Mobileye, an autonomous vehicle technology provider is significantly positive in our view. The acquisition will help the company rapidly penetrate the autonomous car technology market, currently dominated by the likes of NVIDIA and Qualcomm. With the buyout, Intel will now have access to Mobileye’s technologies related to cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management.

9. INTC quarterly revenue growth was 18.70%, higher than the industry and sector average revenue growth (7.99% and 5.17%, respectively).

10. INTC forward dividend yield is 2.48%, higher than the industry (0.73%) and sector (0.25%) forward dividend yields.

11. INTC Price/Book ratio is 3.06, and it’s low compared to its industry peers’ P/B ratios.

12. INTC average analyst rating is Buy.

13. INTC average analyst price target ($54.97) is above its current price ($44.12).

Here are INTC stock sell reasons/signals:

1. PC industry growth has slowed from the heady rates of the 1990s. As a result, Intel's opportunities to expand may be limited.

2. Intel must successfully maintain its technology lead in the computer processor market. Any missteps by the firm could trigger market share loss to AMD.

3. The inability for Intel to break into the smartphone market at a reasonable level is cause for concern, as the PC continues to be replaced by mobile devices.

4. Intel is seeing a growing competitive threat in the server, storage and networking markets. The server segment has always generated strong margins and Intel’s powerful architecture has always been considered supreme. But ARM is posing a challenge in the fast-growing microserver segment and its designs have seen adopters at several Intel competitors.

5. Intel could see increasing competition from IBM in chip architecture. For one, IBM has showcased a 7nm chip design that it expects will be in volume production by 2020. While Intel could have a 7nm chip itself by then, the IBM design will put other options in the market, which can destroy its process lead and therefore impact its profitability on that generation of chips.

6. A relatively smaller concern is the growing cannibalization of its Xeon chips with its new and faster SoCs with FPGA accelerators. It is a fact that Intel gets to sell fewer Xeon chips for every integrated device it sells in the data center. But because the cloud is expanding very rapidly, the strong demand and increased penetration and TAM for Intel (because it is now selling a broader range of products to address a bigger market) is likely resulting in a net positive.

7. INTC profitability is declining. The YoY profit margin change was -2.07pp.

What are your thoughts on INTC?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


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