After Intel (NASDAQ: INTC) crushed market expectations and proved once again its dominance in processor sales in the server space, the stock traded at a new high on April 27 and ended lower by market close. Despite the fair value (at a 14x forward P/E), Intel continues to be a core holding idea for tech investors.
Why INTC Stock Closed Lower
Intel said it would delay its 10nm Canon Lake chip, a truly negative development when Advanced Micro Devices (AMD) is firing on all cylinders with its Ryzen second generation launch. So now that Canon Lake’s shipment volume will shift to 2019, it becomes a setback for the chip giant and an opportunity for AMD.
Intel need not rush Canon Lake’s launch. Slowing PC sales, year-after-year, lessen the need for the fastest, most efficient CPUs in today’s computing world.
Earnings Beat
The latest quarterly earnings beat should allay investor fears over its future. The company has a strategic vision that is beyond PC chips. Its Mobileye acquisition and Altera, too, broaden its business into autonomous driving and programmable chips, respectively. Intel also raised its guidance for 2018.
It expects revenue of between $66.5 billion - $68.5 billion. Previously, its guidance was $65 billion. EPS will be in the range of $3.66 - $4.04, compared to the $3.58 consensus. Strong growth in IoT (up 17% to $840 million) and programmable solutions (17 percent growth) suggests Intel does not need to hurry new products in the PC chip business.
Disclosure: Author owns AMD stock.
Tech Insider
