Intel Stock An Analysis
The chipmaker should search for factors of new growth to keep its stock away from falling down.
Intel Corporation is undoubtedly the giant microchip supplier. It has been dominating the microchip market for so long and is unarguably the synonym to microchips that drive computers and laptops. Its stock’s performance has always been modest until now.
Over the past few years, computer sales have been quite sluggish and since the computers are going obsolete therefore the same trend of slowing sale will be continued for years. Similarly, the customers couldn’t afford upgrading on regular intervals which tampers the processing speed.
This highlights the downside of having tablets, laptops, smartphones, and computers. They require regular updates which are too costly for the people. Not a lot of users could afford the latest versions.
The essential point is that the chipmaker’s core business is stagnant. This is the reason that the Santa Clara, Calif. firm is laying off close to 12,000 workers and is integrating into new business line. The company should actively look for new business growth or else the stock will witness an acute fall.
Intel doesn’t have scarcity of resources therefore it can tread on different areas for growth. As of now, the company is swiftly penetrating into a lot of new industries. If the company continues on the same track, then it will have the potential to send its stock soaring higher.
For the first time ever, Intel has been able to move into one of the giants of the smartphone market –Apple Inc. The tech giant’s new iPhone will reportedly be powered by Intel’s modem chip. This is a huge achievement for the company as earlier the tech titan’s core product –iPhone –was powered by Qualcomm modem chips.
For Apple too, the move is quite commendable as multiple suppliers will let the company has better services at comparatively lower prices.
Earlier, Intel had had quite a hard time while blending into the mobile market. But, this new contract with the tech giant itself is likely to offer good results for the chipmaker. Also, on the basis of the current deal, the chipmaker can score other such contracts with other important smartphone manufacturers.
The important thing to note is that the new shift will not turn the company into profit making within a fortnight. The good thing for the company is that it has finally landed itself on the trail to the success and if it continued to be on it, it will keep the stock moving up. Intel however try to sign as many mobile contracts as possible in order to keep its top line figures soaring up.
Another area which the company is integrating into is data centers. Conventionally, the businesses couldn’t own and operate the data centers or servers. The enterprises had to rent or buy physical space for servers, thoroughly maintain a cooling system for the servers, and employ technicians.
However after the revolution of the internet, it all changed. Businesses like salesforce.com, Inc. and Amazon.com, Inc. blazed the trail of “cloud” data centers. These servers can conveniently be used for multiple services in addition to storage.
The cloud servers are easily manageable. The companies easily punch the data into it and use it for analytics to proper sell to the people. Most importantly, the cost is also lesser than in comparison to cost of holding data centers.
As a business, cloud computing is the best option to go for which can yield piles of cash for the company. Businesses like Amazon made huge profits on the basis of cloud computing and proved the wealth of the business. The margins are comparatively higher in the business and it has been growing rapidly.
Cloud computing is “prime” business for Intel as the company has enough resources to provide coherent infrastructure to base the computing on and that’s the key to this business. As of now, two biggest players of the data center market, Google and Amazon have Intel as their supplier. This has made Intel a market leader. However, the company is strongly contested by NVIDIA Corporation and Broadcom Ltd.
Just to have a hold on its position in the industry, the company should bear with lower margins for some time. It’s quite commendable that the company is not repeating the mistakes it has done in the past and suffered losses consequently. The rapid adoption might let the company to tread on the road to success.
As of now, at the market which closed on Thursday, Intel Corporation stock stood at a price of $32.99. The 52 week range of the stock is $24.87 to $35.59.