Amid the on-going bull run of technology stocks, the ailing Intel share price stood out like a sore thumb. With a P/E ratio of just 9.3, Intel share price is currently being traded at levels way below its competitors, (e.g. AMD and Qualcomm). AMD share price is being traded at P/E ratio of 163 while Qualcomm share price is traded at 50. As one of the leading lights of Nasdaq, has Intel share price lost its shine?
Year-to-date, Intel share price has fallen by 16%. This is in deep contrast to the PHLX Semiconductor Sector Index (SOX), which soared 20% year-to-date. Furthermore, Nasdaq index has soared to record highs for the past few weeks. So the fall of Intel share price must have given investors plenty of sleepless nights.
The plunge of Intel share price was largely attributed to the delayed release of its next-generation 7nm chips. Prior to this event, Intel share price got hit when Apple announced that it would ditch Intel chips for its Mac computers. Following these bombshell announcements, Intel share price got walloped to abysmal levels.
Is this the beginning of the end for Intel share price? In my point of view, probably not. According to Passmark Software, Intel is still the market leader in the CPU industry, with 62.7% of market share as of Q3 2020. This is still considerably much higher than AMD’s 37.3% market share. Given the gap, there is still window of opportunity for Intel share price to widen the gap and recover from the recent fallout.
In my humble opinion, the fiasco of Intel’s 7nm chip production delay has been blown out of proportion and the resulting correction of Intel share price represents a good opportunity for investors to enter. Make no mistake, Intel has reported a record second-quarter revenue. As a growth stock, Intel share price is sensitive to top-line growth. In fact, revenue consistently grew from USD63 billion in 2017 to USD72 billion in 2019. So it is only a matter of time that Intel share price returns to form, if the company consistently generates increasing revenue.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Intel before. Whether Intel share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Intel share price in exciting times
Due to the onset of COVID-19 pandemic, demand for IT will continue to grow and revenue for 2020 is expected to be much better than 2019. Against this backdrop, Intel share price will likely to increase as well. Furthermore, Intel has announced USD 10 billion accelerated shares buyback on 19 August 2020. With support from shares buyback, the slide of Intel share price is expected to be halt.
COVID-19 has only accelerated the pace of digitization and the world is at the cusp of 5G evolution. In the 5G era, the demand for computing will significantly increase to support virtual reality, e-commerce, artificial intelligence and driverless autonomous cars. The management of Intel has anticipated this change years ago and embarked on a transformation journey to capture business opportunities in the realm of 5G.
One of the biggest misconception about Intel is [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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