Shares of Intel Corp. INTC touched a new 52-week high of $36.04 on Sep 1, eventually closing at $36.02. The company returned 23.9% in the past one year and has added roughly 4.6% year to date. Average volume of shares traded over the last three months was approximately 21,619K.
What's Driving Intel?
Intel is one of the world’s leading producers of semiconductor components and digital platforms. Its focus was earlier on making the best computing chips and generating industry-leading margins from them. Now, Intel’s focus has shifted to a product range targeting different segments of the market, namely data center business, cloud and IoT.
In particular, Intel’s data center business and cloud have been registering significant growth. In this regard, the company recently said that it is acquiring Nervana Systems, an artificial intelligence startup based in San Diego. This deal will help Intel to enhance its prowess in data center as well as machine learning, which is gradually gaining prominence.
Another growth driver is the company’s recently launched 7th generation CPU –14nm Kaby Lakechip. Kaby’s biggest feature is improved support for 4K, which is likely to be a big positive going forward. Just like both Broadwell and Skylake, Kaby Lakechip comes with improved graphics performance, better CPU performance and longer battery life.
Also, the price appreciation may be attributed to Intel’s strong fundamentals, solid growth of its cloud business and better-than-expected second-quarter 2016 results reported on Jul 20.
In the second quarter, Intel reported earnings of 59 cents per share that surpassed the Zacks Consensus Estimate of 53 cents. The increase was driven by better operational efficiency and cost cutting measures. However, Intel’s revenue of $13.53 billion was within the guided range of $13.5 billion (+/-$500 million) but below the Zacks Consensus of $14.80 billion.
Also, management provided a solid guidance for the third quarter of 2016. Revenues are expected at around $14.9 billion (+/-$500 million), up 10.1% sequentially and 3.0% from the June quarter of 2015.
In the trailing four quarters, the company delivered an average positive earnings surprise of nearly 7.95%. Intel’s strong revenue growth, solid financial conditions, growth in areas like cloud computing, mobile, data center as well as strong long-term growth potential position it favorably.
Intel’s strong revenue growth, solid financial conditions, growth in areas like cloud computing, mobile, data center as well as strong long-term growth potential position it favorably.
Intel currently carries a Zacks Rank #2 (Buy).
Stocks that Warrant a Look
Some well-placed stocks in the technology space are NVIDIA Corporation NVDA sporting a Zacks Rank #1 (Strong Buy), while Texas Instruments Inc. TXN, and STMicroelectronics NV STM, carrying a Zacks Rank #2 (Buy).
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