In multiple previous articles this year, I’ve praised Intel’s (NASDAQ:INTC) strong artificial-intelligence technology. That powerful AI appears to have greatly enhanced the company’s latest chips, making Intel stock worth buying at this point.
Intel’s new Tiger Lake laptop chips, which the company unveiled on Sept. 2, includes enhanced AI capabilities. According to PC Magazine, using enhanced AI is Intel’s most important strategy for closing the gap between its chips and those of AMD (NASDAQ:AMD).
“Intel has added support and optimizations for numerous AI platforms that manufacturers and developers can use to speed up the performance of their apps,” the publication explained.
The website quotes Intel as saying that the new chips’ enhanced AI capabilities enable computers to perform common tasks more quickly. But the Tiger Lake chips utilize either equivalent or less “computing resources and battery power” than Intel’s previous chips and AMD’s processors, Intel stated, according to PC Magazine.
In addition to enhanced AI, Intel’s new SuperFin system uses other advanced technologies, including “improved gate process and additional gate pitch” to upgrade the chips’ performance. According to the company, the enhancements it’s made improve the performance of its chips as much as transitioning to a smaller chip size would have.
A Closer Look at Intel Stock
Speaking with CNET, Intel claimed that Tiger Lake chips are 24% faster than AMD’s Ryzen laptop chip for common processing chores, as much as twice as fast for video editing and 146% faster for online gaming.
Further, an analyst, Linley Group’s Linley Gwennap agrees that Intel’s new Tiger Lake chips are meaningfully faster than their predecessors, although he scolded the company for waiting three years to significantly increase the speed of its laptop chips.
As the old saying goes, “better late than never.” These improvements will not be too late for Intel. The chipmaker still controls more than 75% of the consumer computer chip market, and its share has actually increased in the last two years.
Although in recent months Intel had started to lose market share to AMD, the new Tiger Lake chips and the launch of similar new chips for other types of computers should stop those market-share declines.
Indeed, Barron’s reported Intel already anticipates that the new Tiger Lake chips will be incorporated into more than 150 laptop designs.
Further Intel has been very successful when it comes to selling chips to data centers. On its Q2 earnings call Intel said its cloud business revenue jumped 47% year-over-year and reached a record level.
Moreover, in the 12 months that ended in Q2, “Intel’s data-centric…revenue has grown from 42% of revenue in 2015 to 51% of revenue,” a Forbes columnist wrote.
The Bottom Line on Intel
Much was made of Intel’s recent announcement that it would not lower the size of its PC chips to seven nanometers as quickly as it had originally expected. But it appears that the company has achieved most or all of the same benefits that the lower chip size would have enabled using other technologies.
As a result, it is likely to stop losing market share to AMD and could very well gain share at AMD’s expense going forward.
Finally I believe that Intel’s strong AI technologies leave it well-positioned to continue to rapidly increase the amount of revenue that it obtains from data centers.
Despite these positive catalysts, Intel stock is trading at a very low forward price earnings ratio of just 11. Given these points, I recommend that investors buy Intel stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.