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Chris Lau, Kapitall: There are signs that suggest the PC sales decline may finally stabilize. If this happens, we found some tech stocks to watch.
Is the decline in the PC market is ending? Quarterly results from
Intel (INTC) and industry data from IDC and Gartner suggest PC sales may finally hold steady. If this happens, which companies will benefit the most?
Chip giant Intel wants to make its products more marketable on smartphones and tablets. The company will be
expanding its contract manufacturing business. But Intel also addressed the slumping PC industry, and believes the sector is bottoming out. Intel may begin to hedge the still-weak PC market by manufacturing components for its rivals.
[Read more from Kapitall: PC Stocks See Sales Dip Again: Can HP and Dell Sell Cheaper PCs to Compete with Tablets?]
Sluggish chip shipments mean manufacturing plants will not be used at to their fullest capacity. But if Intel manufactures chips for
NVIDIA (NVDA) or
Qualcomm (QCOM), this could raise its profit margin significantly.
Return to relevance?
Tablets continue to be personal consumption devices for content, but PCs and laptops are typically better for doing serious work. There is no replacement for a keyboard or mouse device, even as households are increasing the number of tablets they own.
This suggests it is likely there will be fewer PCs per person in households. However, as Intel and competitors like
AMD (AMD) make more power-efficient, fast, budget computers, sales could still improve. Sub-$300 PCs and laptops are growing in popularity. Google introduced the Chromebook and partnered with
Hewlett-Packard (HPQ) to much success.
AMD vs Intel
AMD recently benefited from console releases and is
thought to be making as much as $100 in revenue from each PS4 that's sold. But AMD did not forget the PC market. The chip maker
developed multi-core chips that consume very little energy. The desktop
roadmap for 2014 is promising. It will include chips running as high as 3.5GHz.
Click on the interactive chart to see AMD and INTC stock prices over time.
Intel will not cede its dominance in the low power, high performance market. The company plans to improve yields for 14nm chips.