NEW YORK (TheStreet) -- "Experts" have proclaimed the personal computer industry dead for several years. But while boosting its second-quarter and full-year revenue guidance Thursday, semiconductor giant Intel (INTC) insists PCs are alive and kicking.
That's good news for Advanced Micro Devices (AMD) and Nvidia (NVDA), too.
While citing higher PC unit volume, Intel now expects second-quarter revenue to be $13.7 billion — plus or minus $300 million, and exceeding its prior guidance of $13 billion. Management also expects the midpoint of its gross margin to be 64%, increasing by 1%.
At the same time, management said full-year gross margin is now projected to fall in the upper half of the previous range of 61%, to which Intel cited “expected improvements in unit cost and volume.” It remains to be seen the extent of these results from a profitability standpoint. But suffice it to say, the worst of this PC sales erosion is over.
Sales aren't as robust as they were a decade ago. But large Fortune 500 companies still rely on them to operate their businesses. Investors might have missed on Intel's upside surprise, but other PC-dependent companies like Advanced Micro Devices and Nvidia should see an added boost to their long-term projections.
I see both Nvidia and AMD climbing 24% and 40%, respectively, in the next two to three years. Here's why.
As with Intel, Nvidia still relies on PCs for a significant portion of its revenue. That's not to be confused with the company being strictly a PC story. Nvidia shares are down 24% over the past three years. Shares are up 24% year to date and can still reward investors with additional gains.
Even amid weak PC sales, Nvidia has been able to offset the drought in strong demand within its Tegra chip line. And with its new Tegra K1 chip powering Google's (GOOG) experimental Project Tango tablet, Nvidia's stock can see an immediate boost should this tablet take off.