Intel Corporation’s Performance-Boosting CPUs Could Turbocharge INTC Stock

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On Monday, Intel Corporation (NASDAQ:INTC) fired back against rival Advanced Micro Devices, Inc. (NASDAQ:AMD) and against declining PC sales in general.

Intel Corporation’s Performance-Boosting CPUs Could Turbocharge INTC Stock

Source: Intel

The company officially launched its 8th generation Core processors, and claims they offer a massive leap in PC performance — the kind of boost that happens just once a decade.

The question is, will the new Intel CPUs be enough to convince consumers and businesses to upgrade? Whether they do (and whether they choose Intel over AMD) will have profound implications for INTC stock.

Intel’s Challenges

INTC stock has been flat over the past three years. A big part of that has been the combination of missing out on the smartphone boom and declining PC sales. This year in particular saw even more troubling signs for the company.

PC sales continue to fall. 2017 marked the fifth straight year of decline. And after the new Intel CPUs released in 2016 (Kaby Lake) failed to light the world on fire due to modest improvements, the company’s only rival in PC processors took advantage of the situation to launch an offensive.

AMD’s new Zen architecture emphasizes multiple cores and its Ryzen chips offer a price advantage over Intel’s Kaby Lake line-up. Those Ryzen CPUs have won some big accolades and AMD has been all over the tech news this year with a stream of releases and high-profile partnerships.

In July, Intel lost the crown of world’s largest computer chip maker by sales –a title INTC had held since 1972 — to Samsung Electronics Co Ltd (OTCMKTS:SSNLF). In the previous quarter, Intel sold $14.8 billion worth of semiconductors, while Samsung posted sales of $15.8 billion worth of chips.

New Intel CPUs to the Rescue?

Yesterday, Intel officially announced the launch of its 8th generation Core CPUs. The first chips to be released are based on the existing Kaby Lake architecture (Coffee Lake and Cannon Lake-based chips will be arriving later this generation), but even the first of the new Intel CPUs offer an impressive performance boost.

Unlike the modest gains posted by the previous generation of Core CPUs, Intel says the mobile chips destined for laptops that will be released in September are up to 40% faster than last year’s.

Overall, a laptop with one of the new Intel CPUs will be twice as fast as a model from five years ago. Some tasks see much more extreme gains. For example, editing 4K video is 14.7 times faster with the 8th generation chips than with a 5 year-old computer.

And it’s those older machines that Intel is targeting with its 8th generation chips. The company says there are 450 million PCs in use that are over five years old and those PC owners face a “vastly compromised” user experience in the age of 4K video and virtual reality.

Intel is positioning the performance offered by the new quad-core 8th generation chips as the solution to being able to make the most of the latest computer technology. With annual PC sales down nearly 100 million units since their peak in 2011, convincing those 450 million PC owners to upgrade to new Intel CPUs would be a big win.

INTC says it is expecting PC partners to offer 145 different laptop, 2-in-1 and convertible designs to choose from, when the first wave of 8th generation devices hits store shelves in September.

The new Intel CPUs, along with the upcoming Kaby Lake and Coffee Lake releases should ensure that Intel doesn’t take a big hit from a surging AMD. And the claimed 40% performance boost of the 8th generation Intel chips should be enough to convince some older PC holdouts to upgrade their computers, providing a temporary boost in sales.

That seems likely to provide a shot of adrenaline to INTC stock over the next year. However, long term, Intel needs to continue pushing other product lines — like its data center server chips business and Mobileye self-driving car technology — if it’s going to thrive despite the continuing decline of its core PC processor business.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2017/08/intel-corporations-performance-boosting-cpus-could-turbocharge-intc-stock/.

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