A massive revolution in the information technology field is underway, and Intel Corp. (NASDAQ:INTC) hopes to capitalize.
The Internet of Things (IoT) has the potential to rival the introduction of the MS-DOS operating system, leading several semiconductor technology companies, including INTC, International Business Machines Corp. (NYSE:IBM), and Cisco Systems, Inc. (NASDAQ:CSCO) to help facilitate and harness its power through standardization.
The IoT, where virtually any object can be networked to the Internet, has firm support by industry experts. Gartner, the world’s leading information technology research and advisory company, issued a prediction that by the end of the year 2020, 25 billion devices will be networked, the equivalent of three devices per person on the planet.
For its part, INTC believes in Cisco’s much more optimistic forecast of 50 billion networked “things” within that same time frame, which, according to Louis Summerton, head of INTC’s IoT laboratories in Europe and the Middle East, is
Intel stock will skyrocket to the moon, so the conventional wisdom would suggest. But try telling that to INTC investors, who appear pensive and cautious,based on the evidence provided by the markets. True, Intel stock has veritably soared since the middle of 2014 until last December, gaining 35%. For the year-to-date, however, INTC has been a Dow Jones Industrial Average (INDEXDJX:.DJI) laggard, underperforming to the tune of nearly -9%.
More ominous, though, is the appearance of a long-term head-and-shoulders pattern in Intel stock’s price chart, which typically implies a reversal after an uptrend. Under a classic technical analysis interpretation, the inability of the bulls to push past the peak price established by the “head” suggests a downside risk target of $31 for INTC, established by the “neckline” of the pattern.
However, the second shoulder for Intel stock has failed to surpass the price point established by the first shoulder. This makes the already bearish pattern stand on a negatively-slanted angle, possibly teasing at a sub-$30 market value before the year is over.
Longer-term statistical trends also confirm the pensive action for Intel stock. The choppy ride for INTC over the past 90 days has yielded an average performance of 0.55%, which typically results in a net probability of only 52.5% that the markets will swing positive over the next three months. Given that the odds are only marginally better than random chance, there’s simply not enough for investors to place a heavy-handed bet.
The Internet of Things is certainly a leap forward in technology and represents the growing standards of human innovation. But for Intel stock and many other competitors, it may not be as profitable as they would like.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
