The problem is that Intel's ability to continue to defy gravity is nearing its end. Four months into the launch of Microsoft's ( MSFT) latest personal computer operating system it is safe to conclude that the tepid adoption rate of Windows 8 -- which by some accounts has been even slower than it was for the much-maligned Windows Vista -- will not catalyze a meaningful upgrade cycle for personal computing hardware. As a result, as consumers continue to spend a growing share of their technology dollars on smartphones and tablets, the PC market is poised for a decline in sales this year. With Intel's core business set to experience intensifying pressure, it is up to its server business and nascent processor business for mobile devices to take the baton from here. That seems unlikely. While relative strength in the server market might continue in the near term, mobile devices present a conundrum for the venerable chipmaker. For Intel to regain some positive investor sentiment, the company needs to gain traction in the market for mobile systems on a chip. With the mobile device market currently dominated by devices made by Apple and Samsung, rival chip designs control the market. Apple's proprietary A-series chips, Qualcomm's ( QCOM) Snapdragon chips and even Samsung's own Exynos chips are based on microprocessor architecture developed by competitor ARM Holdings ( ARMH). That leaves Intel with a very steep challenge to gain market share.
In my view, these developments skew the risk for investors to the downside rather than to the upside. All said, I'm content to watch this one from the sidelines. --Written by Craig Gentry, chief investment strategist at Destination Wealth Management. The author has no personal ownership or investment banking relationships.