Intel: Still Attractive After Security Issue?
The revelation that Intel (NASDAQ: INTC), not Advanced Micro Devices (NASDAQ: AMD), has a security flaw in its chip pulled the stock sharply below its 52-week high. Had Intel not faced needing to spend time and resources fixing the problem, the stock may have traded closer to $50 a share. Instead, the stock has a P/E of just 15 times and its public relations department is minimizing the damage from the security problem.
On Jan. 12, Intel asked computer makers and cloud providers to stop installing an update it released for resolving the chip problem. The fix for the Broadwell and Haswell CPUs may cause a chip reboot rendering the fix useless. Though a delay in releasing a working fix is a setback,
INTC stock trades at a discounted valuation.
Earnings will fall this year but the company is sustaining its PC chip sales through the Coffee Lake refresh. It is pivoting its business towards the automotive market. As more cars add advanced tech and the tech content per vehicle goes up, Intel is well-positioned to benefit.
Investors still await for proof that the Mobileye acquisition will pay off but Intel is on the right track for growing the business.
Disclosure: Author holds shares of AMD.