Reports that demand for Intel (NASDAQ:INTC) chips picked up pace in the first quarter is a reminder of the company’s resilience. Even as the world economies plunge, not all sectors are stalling. Companies that accommodated a work at home helped fuel the demand for better home computers. Servers that power corporate systems need better chips, too.
Before the coronavirus crisis, demand for the home PC already started creeping higher. Innovation in the smartphone peaked a while ago, while consumers and businesses ignored PCs. With Microsoft’s (NASDAQ:MSFT) vastly improved operating system and Apple computers too expensive to maintain, PC demand is gaining momentum. Parents who are working from home and children learning online as schools are shut down are fueling the need for better home computers.
Intel, and to a lesser degree Advanced Micro Devices (NASDAQ:AMD), are poised to benefit from a steady resurgence in computer processor demand. Previously, Intel maintained strong profit margins due to a shortage in its CPUs. Looking ahead, its roadmap includes Alder lake, a 10nm CPU slated for a 2020 release. This chip iteration will have better yields, which will lift profit margins. It also sets the stage for a 7nm release next year in 2021.
After Intel stock bottomed at below $45, it may make another run back to the $65 level in a few weeks.
