This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Will chipmaker stocks maintain gains?

By Chris Lau for Kapitall.

Investors that missed out on Intel’s (INTC) big run up might not have a pull-back to look for. After upping its guidance, Intel shares rallied from the mid $20’s to close near $31 in recent days. A lack of margin pressure, strong pricing power, and ongoing product developments all suggest Intel’s shareholders will see more upside.

Margins improving

Intel raised its forecast on revenue growth for 2014. The firm now expects revenue will hit $13.4 to $14 billion. This is sharply higher than analyst consensus ($13 billion). Bearishness lingered on Intel for several quarters, chiefly because investors expected PC sales to decline preciously. Instead, Microsoft’s (MSFT) move to end support for Windows XP will jumpstart sales of computer chips. This will also be a boon for Advanced Micro Devices (AMD) shareholders, though to a lesser degree.

Mobile growth missing

Intel’s lack of success in mobile, relative to its strength in the PC market, weighed on its shares in the past. Its Atom processor is far behind other mobile chip solutions, including those sold by Qualcomm (QCOM) and Apple (AAPL). If Intel remains committed to developing low cost mobile chips, it might start to gain market share. The chip is being offered by manufacturers whose tablets run on Microsoft’s operating system.

Server market

The PC market isn’t the only segment benefiting from faster, more efficient chip architecture. Grantley is a chipset that will be based on the Haswell architecture. It will have 14 cores, while supporting DDR4 DRAM. Grantley will succeed the Romley server platform.

Bottom line

Intel’s run above $30 might hold water this time around. The PC refresh cycle will not be as big as investors once hoped for. Tablet and smartphone demand will limit the cycle. Despite that, people will still upgrade their systems, and this will still benefit Intel and AMD. On the server side, profit margins and revenue will improve for Intel thanks to new product releases. This should bode well for its shares this year.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs