Tag Archives: INTC

Its Time to Double Down on Intel Stock

I was recently underwater on my latest investment in Intel (NASDAQ:INTC). But rather than sell my shares of INTC stock, I doubled down.

Sign of Intel (INTC stock) at entrance of The Intel Museum in Silicon ValleySign of Intel (INTC stock) at entrance of The Intel Museum in Silicon Valley

Source: JHVEPhoto / Shutterstock.com

While I love my shares in Nvidia (NASDAQ:NVDA) and Taiwan Semiconductor (NYSE:TSM), I refuse to believe the conventional wisdom that Intel is a dead parrot.

This is a chip company selling at less than 12 times earnings. It pays a dividend yielding 2.6%. It just reported quarterly earnings of $5.1 billion, or $1.24 per share, on revenue of $19.6 billion. That’s more than 20 cents of every dollar hitting the net income line.

Intel’s performance looks bad only compared to other semiconductor companies. Advanced Micro Devices (NASDAQ:AMD) has delivered twice Intel’s capital gains in 2021. Even Texas Instruments (NASDAQ:TXN) has done better.

But I’m not buying for yesterday. I’m buying for tomorrow.

The President’s Bet on Intel

If President Joe Biden’s Administration is betting big on any U.S. company, it’s Intel.

The Administration pledged $50 billion for semiconductors as part of its Build Back Better plan. That money is meant to not only end the current chip shortage, but to ensure future semiconductors are made in America.

As a U.S.-based chip manufacturer, Intel will likely be one of the primary recipients of those funds. It’s putting $20 billion into two new Arizona fabrication plants and is looking for a U.S. site on which it will spend $100 billion over the next decade.

CEO Pat Gelsinger insists he can match the ultraviolet innovations of Taiwan Semiconductor, which will soon produce chips with circuit lines just three nanometers apart. In the meantime, he’ll take all their extra production.

He’s also talking up a new “angstrom” era starting in 2024. An angstrom is one-tenth of a nanometer. The new technology that will come with this era is dubbed the RibbonFET and is Intel’s first new transistor technology since 2011.

Against All Odds, INTC Stock May Still Be a Winner

Gelsinger has admitted to China’s cost advantages. It will cost twice as much to build chips in the U.S. as it would to build them there. It’s why companies that just design chips, like Nvidia and AMD, are worth more than those that make them.

Moore’s Second Law holds that while chips get cheaper over time, the process of making them gets more expensive. Gelsinger is building in the U.S. anyway, hoping government support will allow the company to be competitive.

Intel is continuing to lose market share in the data center to AMD, but it’s not losing its lead. It will still surpass a 30% share by the end of 2021, which is twice the share AMD can expect in the same timeframe.

Despite efforts by Amazon (NASDAQ:AMZN) and other Cloud Czars to build their own chips, semiconductors are still niche products. Data center revenue for the most recent quarter was just behind that of 2020, when the pandemic saw cloud spending spike.

What the Bulls and Bears See in INTC Stock

Analysts remain unimpressed. They say Intel’s second quarter revenue was no better than it was a year ago. INTC stock fell after earnings were released. Seven of the 27 analysts following Intel at TipRanks now say you should sell it. InvestorPlace contributor Tyler Craig agrees.

Bears are seeing AMD’s continued gains in revenue and market share and believe chip-making remains a losing proposition. Intel is offering “flowery promises,” but after watching AMD stock out-gain Intel for a decade, they’re sticking with what works.

Until recently, I was a notable Intel bear. I was especially hard on former CEO Brian Krzanich, who was finally let go after he was found to be in a relationship with an employee. Among several actions he took ranging from questionable to downright criminal, he stripped Intel of its top executives which hindered its growth.

I thought Krzanich’s successor, Robert Swan, was in over his head. But to Swan’s credit, he did recruit Gelsinger, who is a different cat. He’s getting the band back together. When it’s hitting on all cylinders, Intel is the mightiest manufacturing machine America has ever seen.

On the date of publication, Dana Blankenhorn held long positions in INTC, NVDA, TSM and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. 

5 Stocks That Could Be the Next Amazon

Amazon.com, Inc. (NASDAQ:AMZN) has been one of the more impressive stocks of the past 25 years. In fact, AMZN now has returned nearly 100,000% from its IPO price of $18 ($1.50 adjusted for the company’s subsequent stock splits).

A large part of the returns have come from two factors. First, Amazon has vastly expanded its reach. What originally was just an online bookseller now has its hands in everything from cloud computing to online media to groceries. And its shadow is even larger. A potential entry by Amazon has rattled pharmacy stocks and medical distributors, among others.

Secondly, as a stock, AMZN has managed the feat of keeping a growth stock valuation for over two decades. I’ve long argued that investors can’t focus solely on the company’s high P/E ratio to value Amazon stock. But however wise an investor might the current multiple is, the market has assigned a substantial premium to AMZN stock for over 20 years now.

It’s an impressive combination — and one that’s likely impossible, or close, to duplicate. But these five stocks have the potential to at least replicate parts of the Amazon formula. All five have years, if not decades, of growth ahead. New market opportunities abound. And while I’m not predicting that any will rise 100,000% — or 1,000% — these five stocks do have the potential for impressive long-term gains.

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5 Stocks That Could Be the Next Amazon Stock: JD.com (JD) 5 Stocks That Could Be the Next Amazon Stock: JD.com (JD)Source: Daniel Cukier via Flickr

JD.com Inc(ADR) (NASDAQ:JD) is the company closest to following Amazon’s model. While rival Alibaba Group Holdings Ltd (NYSE:BABA) gets most of the attention, it’s JD.com that truly should be called the “Amazon of China,” as Will Healy pointed out in December.

Like Amazon (and unlike Alibaba), JD.com holds inventory and is investing in a cutting-edge supply chain. It, too, is expanding into grocery, like Amazon did with its acquisition of Whole Foods Market. A partnership with Walmart Inc (NYSE:WMT) should further help its off-line ambitions. JD.com even is cautiously entering the finance industry.

That ability to both provide best-in-class logistics and satisfy a wide range of customer needs is what has made Amazon a success. And while JD may not rise to the scale of Amazon, at its current valuation it doesn’t have to. After a recent pullback, JD trades at less than 26x forward EPS. That’s despite 40% revenue growth in 2017, and expectations for a 30% increase in 2018.

And it sets up a scenario where JD stock could — if sentiment finally turns in its favor for good — appreciate for years, thanks to both strong bottom-line growth and an expanding multiple from optimistic investors.

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5 Stocks That Could Be the Next Amazon Stock: Square (SQ) 5 Stocks That Could Be the Next Amazon Stock: Square (SQ)Source: Chris Harrison via Flickr (Modified)

Admittedly, I personally am not the biggest fan of Square Inc (NYSE:SQ) stock. I like Square as a company, but I’ve questioned just how much growth is priced into SQ already.

Of course, skeptics have done little to dent the steady rise in AMZN stock. And valuation aside, there’s a clear case for Square to follow an Amazon-like expansion of its business. Back in January, Instinet analyst Dan Dolev compared SQ to AMZN and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG), citing its ability to expand from its current payment-processing base:

In 10 years, Square is likely to be a very different company helped by accelerating share gains from payment peers and relentless disruption of services like payroll and human resources.

Just as Amazon used books to expand into e-commerce, and then e-commerce to expand into other areas, Square can do the same with its payment business. The small business space is ripe for disruption, as Dolev points out. Integrating payments into payroll, HR, and other offerings would dramatically expand Square’s addressable market – and lead to a potential decade or more of exceptional growth.

Again, I do question whether that growth is priced in, with SQ trading at ~about 12x the company’s 2018 guidance for “adjusted” revenue. But if — again, like AMZN — Square stock can combine a high multiple with consistent, impressive, expansion, it has the path to create substantial value for shareholders over the next five to 10 years.

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5 Stocks That Could Be the Next Amazon Stock: Shopify (SHOP) 5 Stocks That Could Be the Next Amazon Stock: Shopify (SHOP)Source: Shopify via Flickr

E-commerce provider Shopify Inc (NYSE:SHOP) probably doesn’t have quite the same opportunity for expansion as Square. And it too has a hefty valuation, along with a continuing bear raid from short seller Citron Research.

But I’ve remained bullish on SHOP stock — and here, too, a recent pullback presents a buying opportunity. Shopify is dominant in its market of offering turnkey e-commerce services to small businesses. That’s exactly where consumer preferences are headed: small and unique over large and bland. And because of offerings like Shopify (and Amazon Web Services), those small to mid-sized businesses can compete with the giants.

Meanwhile, Shopify does have the potential to expand its reach. Just 29% of revenue comes from overseas, a proportion that should grow over time. It’s moving toward capturing larger customers as well through its “Plus” program, picking up Ford Motor Company (NYSE:F) as one key client. The development of an ecosystem for suppliers and the addition of new technologies (like virtual reality) give Shopify the ability to offer more value to customers — and to take more revenue for itself.

Like SQ, SHOP is dearly priced. But both companies have an opportunity to grow into their valuations. And given long runways for Shopify’s adjacent markets, it should keep a high multiple for some to come. As a stock, if not quite as a company, SHOP has a real chance to follow the AMZN formula for long-term upside.

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5 Stocks That Could Be the Next Amazon Stock: Roku (ROKU) 5 Stocks That Could Be the Next Amazon Stock: Roku (ROKU)Source: Shutterstock

Roku Inc (NASDAQ:ROKU) might have the best chance of any company in the U.S. market to follow Amazon’s strategic playbook. The ROKU stock price is a concern: I wasn’t thrilled about the price after a huge post-earnings gain back in November, and even near a five-month low ROKU isn’t close to cheap.

But — perhaps even moreso than Square — Roku now isn’t what Roku is going to be in ten years. The hardware business is a loss leader, but one that allows Roku to serve as the gateway to content for millions of customers. As the company pointed out after Q4 earnings, it’s already the third-largest distributor of content in the U.S. The Roku Channel is seeing increasing viewership. The company offers pinpoint targeting of advertisements — without the messy data problems afflicting Facebook, Inc. (NASDAQ:FB).

Roku is becoming increasingly embedded in TVs, though a deal between Amazon and Best Buy Co (NYSE:BBY) raised some fears about those software efforts going forward. It has a plan to roll out home entertainment offerings like speakers and soundbars, creating a long-sought integrated experience. It could even, as it grows, look to develop or acquire content itself, positioning Roku not as just a conduit to Netflix, Inc. (NASDAQ:NFLX) but a rival.

The bull case for Roku stock is that its players are like Amazon’s books — a way to garner customers and get a foot in the door of the exceedingly valuable media business. What Roku does now that it has entered will determine the fact of ROKU stock. But the amount of options and a reasonable valuation (Roku’s market cap is barely $3 billion) mean that betting on its strategy could be a lucrative play.

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5 Stocks That Could Be the Next Amazon Stock: Nvidia NVIDIA Corporation Stock (NVDA) Won't Stay Down Long After Shocking Analysts Source: Shutterstock

In the context of the stocks chosen here, Nvidia Corporation (NASDAQ:NVDA) doesn’t seem particularly expensive. But in the context of the traditionally cyclical — and low-multiple — semiconductor space, a ~34x multiple to 2018 consensus EPS estimates, even backing out net cash, is awfully pricy.

And with NVDA up a whopping 1,550% in just the past five years, investors would be forgiven for thinking the run might come to an end. Indeed, NVDA stock hasn’t really moved over the past four-plus months.

But the huge amount of secular tailwinds behind Nvidia suggest that the company should be able to drive torrid growth for years to come – and to maintain a multiple that looks rather high on a historical basis. The company’s automotive business gets a fair amount of press, given its potential applications to autonomous driving. But that growth likely won’t come in earnest until the next decade.

It’s the datacenter business that looks most appealing in the near term. Revenue in that category more than doubled in 2017. Thanks to cloud providers like AWS, demand should continue for years to come. And with Nvidia taking share from Intel Corporation (NASDAQ:INTC), its growth should be even better than that of the market. High-end gaming demand should rise, and virtual reality will add another tailwind there.

Unlike, say, Roku (or early-days Amazon), Nvidia’s growth opportunities are mostly known. But at $223, even with a high multiple, they’re not fully priced in. I still see an easy path to $250 for NVDA in the near term. Longer-term, its presence (if not outright dominance) of key markets should lead Nvidia stock to double, at least.

As of this writing, Vince Martin has no positions in any sec

Upcoming Earnings: Industrial Conglomerate GE Reports Friday Morning

Industrial conglomerate General Electric Company (NYSE: GE) is scheduled to report earnings before market open on Friday, Apr. 20.

CEO John Flannery has faced plenty of challenges since he took over in August 2017, working to streamline the massive company and improve transparency. In recent quarters, GE’s issues have been numerous and well publicized.

In the time that Flannery has been at the helm, GE has halved its dividend; it took a surprise $6.2 billion after-tax charge in Q4 2017 related to GE Capital’s insurance portfolio, while adding $15 billion to its reserves  for future payouts over the next seven years; and recently restated 2016 and 2017 financials, reducing earnings by $0.30 per share. The restated financials also included adjustments related to pensions, cash flows and income taxes.

Clearly, the company’s turnaround efforts, which include a multi-year plan to improve GE Power as well as exiting more than $20 billion worth of business over the next several years, are going to take time.

There have been some signs of progress from Flannery’s plan so far. When GE reported Q4 2017 results, it generated $9.7 billion in adjusted cash flow from operating activities for fiscal 2017, compared to guidance of $7 billion.

Since announcing plans to exit $20 billion in business, it has sold its industrial solution business in a $2.6 billion deal to ABB (ABB) and recently announced a $1.05 billion deal to sell healthcare IT businesses to private equity firm Veritas.  And Bloomberg reported that several companies are considering a bid for GE’s Jenbacher unit for more than $3 billion.

On tomorrow’s calls, analysts are likely to be digging in to get a better idea of restructuring progress.

GE Earnings

For Q1 2018, GE is expected to report adjusted EPS of $0.11 on revenue of $27.88 billion, according to third-party consensus estimates. In Q4 2017, revenue missed estimates, coming in at $31.4 billion versus expectations for $32.7 billion, and earnings also came up short by a penny at $0.27 per share after removing charges and one-time items.

GE previously lowered its earnings guidance for all of fiscal 2018 to a range of $1.00 to $1.07, but analysts seem to think that’s a little optimistic given they have an average estimate of $0.95. Out of 17 analyst ratings, earnings estimates range from $0.87 to $1.04 per share.

GE Options Trading Activity

Around GE’s upcoming report, options traders have priced in a 4.8% share price move in either direction, according to the Market Maker Move indicator on the thinkorswim® platform. Implied volatility was at the 76th percentile as of this morning. 

GE 1-YEAR CHART. GE shares have dropped from a 52-week high of $30.54 all the way to a new 52-week low of $12.73 on March 26. The stock has bounced a little bit off that level and has been trading around the mid-$13 range for the past few sessions. Chart source: thinkorswim® by TD Ameritrade.  Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

In short-term trading at the Apr. 20 monthly expiration and the next several weekly expirations, a lot of the activity has been concentrated at the 14 strike for both puts and calls, just out of the money. At the May 20 expiration, trading has also been heavier at the 14-strike call, while activity on the put side has been mostly at the 13 and 14 strikes. 

Overall during yesterday’s session, trading was heavier on the call side, with a put/call ratio of 0.476.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

What’s Coming Up

Next week brings results from many of the largest companies in the tech sector:

Google-parent Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) reports after the close Monday, Apr. 23
Twitter (NYSE: TWTR) reports before market open Wednesday, Apr. 25 and Facebook, Inc. (NASDAQ: FB) reports after the close the same day
Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC) and Amazon.com, Inc. (NASDAQ: AMZN) report after the close Thursday, Apr. 26

In addition to the tech-heavy week, some of the other companies on the docket are Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), Ford Motor Company (NYSE: F), General Motors Company (NYSE: GM), Caterpillar Inc (NYSE: CAT), Boeing Co (NYSE: BA), Chevron Corporation (NYSE: CVX) and Exxon Mobil Corporation (NYSE: XOM). If you have time, make sure to check out today’s market update for a look at what else is going on.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Stocks Worth $2.2 Trillion Are “In Play”; Here’s What to Do

It’s rare that so many of the market’s biggest, most powerful companies get swept up in the proverbial whirlwind, but that’s what’s happening right now.

Headline risk is off the charts – and all over the place: Trump is gunning for Amazon.com Inc. (Nasdaq: AMZN).

Privacy controversy still swirls around Facebook Inc. (Nasdaq: FB), where CEO Mark Zuckerberg is publicly trading barbs with Apple Inc. (Nasdaq: AAPL) CEO Tim Cook – who is in turn said to be considering getting Intel Corp. (Nasdaq: INTC) chips out of his Mac machines by 2020.

And all this while Elon Musk’s crowd favorite Tesla Inc. (Nasdaq: TSLA) is burning cash at alarming rates.

Volatility rules right now. Like the saying goes, these are “Interesting times.”

To help make sense of where these stocks – held by millions of investors – stand in the big picture, Editor Mahdis Marzooghian sat down with our Technical Trading Specialist, D.R. Barton, Jr.

No one reads a stock like D.R. – he’s fresh from recommending the latest triple-digit (101.5%) gainer for his subscribers in the choppiest market in years.

Buy… hold… or flat-out dump: Here’s exactly what D.R. thinks of these marquee stocks right now…

Join the conversation. Click here to jump to comments…

Intel Begins 2018 as the Worst Performing DJIA Stock

Intel Corp. (NASDAQ: INTC) got some bad news last week regarding a security flaw in the chips it has been producing for at least the past two decades. And while the company’s stock has recovered somewhat since the news broke, it closed out the first week of the year as the worst performer among the 30 stocks that comprise the Dow Jones Industrial Average (DJIA), with a share price loss of 3.08%.

The second-worst performer for 2018 among the Dow 30 is Travelers Co. Inc. (NYSE: TRV), which is down 2.57% in the first week of the year, followed by Verizon Communications Inc. (NYSE: VZ), down 0.85%, and Procter & Gamble Co. (NYSE: PG), down 0.7%. These are the only four stocks that posted share price losses last week.

The Dow posted an all-time high of 25,299.79 on Friday and closed the week at 25,295.87. The index gained about 1.9% in the first week of the year.

When every one of a company’s principal product for the past 20 or so years is revealed to have a major flaw, it’s only realistic to expect the stock’s price to tumble. When word got out last Tuesday that Intel’s x86 processors had two gaping holes that could allow cybercrooks to steal personal data from any machine, the share price plunged more than 5%.

It turned out that chips based on designs from other semiconductor makers like ARM and AMD also had one of the same flaws, dubbed Meltdown and Spectre. The San Jose Mercury News explains:

Meltdown is exclusive on Intel chips and allows hackers to bypass the hardware barrier between running applications and the computer’s memory, thereby allowing hackers access to the latter. Spectre affects chips made by Intel, AMD and ARM and tricks applications to hand over secret information.

Microsoft already has issued a software patch, and Apple and Google are working on fixes for their products, including smartphones and tablets.

Intel shares dropped to a low of $42.69 on Thursday before recovering to close the week at $44.74. From Tuesday’s closing price of $46.85, the shares lost more than $2.00 by the end of the week. The stock’s 52-week range is $33.23 to $47.64, and the 12-month consensus price target is $47.08. The low target is $32 and the high target is $58.

ALSO READ: General Electric From Worst to First Among DJIA Stocks