There’s no mistaking which part of Intel Corporation’s (NASDAQ:INTC) business is driving Intel stock higher.

Two words: Data centers.

In fiscal 2017, the company’s Data Center Group (DCG) saw revenue increase 11.0% to $19.1 billion on the top line with $8.4 billion in operating income on the bottom. That’s a 44% operating margin, 600 basis points higher than its Client Computing Group (CCG) and double its Internet-of-Things Group (IOTG).

InvestorPlace.com’s Luke Lango recently emphasized data centers in his rationale for Intel stock moving to $60.

“This rally in INTC stock will continue. This is still the lowest multiple player with exposure to secular growth markets like data centers,” Lango wrote in January. “As the Spectre and Meltdown security vulnerabilities move into the rear-view window, investor demand for INTC stock will only grow.”

With Intel stock up 7% year-to-date through February 26 and 38% over the past 52 weeks, it’s easy to see why investors continue to get excited about the company’s growth in new frontiers such as data centers.

Intel Stock Won’t Hit $100

Intel stock has never traded higher than $75.81. That happened all the way back in August 2000.

At the end of December, I mentioned that Intel is trading at an earnings multiple that’s 70% lower than what it was in 2000, an oddity when you consider how well its DCG and IOTG business units are performing.

I ultimately concluded that $100 likely wouldn’t happen for at least 24-36 months until multiple expansion can get to the level it needs to, to justify a triple-digit stock price. 

So, if you’re looking for a double by the end of 2018, you might want to look elsewhere. If you can live with a 2.4% dividend yield and annual capital appreciation of 10-12%, it’s right up your alley.

The One Thing Intel Does Well

How many Intel shares did the company repurchase in the fourth quarter? Zero.

In fiscal 2017, Intel bought back 101.3 million of its shares at an average price of $35.69 a share. None of those repurchased after September 30. 

Why is that relevant, you might ask?

It shows an unbelievable amount of restraint on the part of the company. INTC stock closed at $37.60 on September 29, 2017, the last day of trading in the third quarter. By the end of the fourth quarter, its stock price had risen to $45.85, a 22% increase in just three months.

And Intel bought none.

That’s telling when you consider it bought back an average of 33.8 million shares in each of the first three quarters of the year.

I went back and looked at the company’s 10-Ks and found that the fourth quarter of 2017 was the only quarter in the past five years where it didn’t buy back any of its stock. Nowhere in the company’s conference call transcript will you see any reasons given by the company for not making any buys in the fourth quarter — which leads me to believe that this was merely a day-to-day capital allocation decision.

Bottom Line on Intel Stock

You can talk all you want about Intel’s growing data-center business, but at the end of the day, capital allocation decisions like this one say just as much about why you might want to own Intel stock over the long haul. 

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