At first glance, technology stalwart Intel (NASDAQ:INTC) seems an unusually risky choice to lead off the new year. Suffering significant losses in 2022, Intel encounters a tough macroeconomic environment that detracts from pricey hardware solutions. Nevertheless, the company’s latest announcement regarding its mobile processor might shift the narrative positively. Fundamentally, INTC stock deserves at least a second look among bullish investors.
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At the tech industry tradeshow CES last week, Intel announced the launch of its 13th generation Intel Core mobile processor family. At the center of attention stood the flagship Core i9-13980HX. According to the tech firm’s website, this is “the first 24-core processor for a laptop and world’s fastest mobile processor.” Following major concerns about the viability of INTC stock, the underlying company needed this powerful catalyst.
“The 13th Gen Intel Core mobile processor family delivers unrivaled, scalable performance for leadership platforms across all laptop segments,” said Michelle Johnston Holthaus, executive vice president and general manager of the Client Computing Group at Intel. With the processor’s technologies and global partner ecosystem, users “can game or create from anywhere,” added Holthaus.
Still, the main headwind that long dogged INTC stock and similar investments centers on the global supply chain disruption. Further, looming recession risks imply that, over time, the semiconductor industry may suffer from an inventory glut.
To be fair, if Intel merely focused on products for the average consumer, INTC stock could be problematic. However, even with macro headwinds, the processor angle presents a noteworthy narrative.
INTC Stock Benefits from Two Upside Catalysts
Those familiar with semiconductor technologies will likely arrive at the conclusion that for the average user, the i9-13980HX represents overkill. For instance, Intel’s stated 5.6 gigahertz (GHz) turbo frequency – while delivering wickedly fast performance and multitasking capabilities – is akin to slapping on a Lamborghini engine on a Miata. It’s possible but impractical. That is unless people will have a need for it.
Indeed, the bullish argument for INTC stock zeroes in on the reality that, yes, a growing market will want such processing power. Arguably, two main sectors may bolster sales of the Core i9-13980HX.
First and most obviously, the professional (or serious amateur) video-gaming arena will pay top dollar for such rapid-fire performance. According to a study by Expert Market Research, the global laptop market reached a valuation of $165.33 billion in 2021. Analysts there project that this segment will expand at a compound annual growth rate (CAGR) of 3.9% between 2022 and 2027.
In contrast, the global gaming laptop market is much smaller, reaching a valuation of about $10.84 billion in 2021. However, according to Proficient Market Insights, the segment will grow at a CAGR of 7.88% between 2022 and 2027. Therefore, in the laptop realm, the gaming segment will likely accelerate harder, potentially boding well for INTC stock.
Another bullish catalyst for Intel arrives in the form of the gig economy. With the aforementioned recession pressures looming, employers no longer must play nice with their employees. If workers want to throw an attitude about not wanting to return to the office, management may accommodate – permanently.
Certainly, some folks will value their time over their job. Therefore, the gig economy may expand more than previously thought. As for INTC stock, these newly minted freelance professionals will likely need robust hardware. That’s an opportunity gap the i9-13980HX can fill.
Is Intel Stock a Buy, Sell, or Hold?
Turning to Wall Street, INTC stock has a Hold consensus rating based on three Buys, 20 Holds, and eight Sell ratings. The average INTC price target is $29.57, implying 1.9% upside potential.
Intel’s Financials May Attract the Speculators
Still, INTC stock doesn’t present the most comfortable picture for every investor. In the trailing year since the Jan. 6 session, shares gave up 48% of equity value. However, it’d be remiss not to point out that INTC gained almost 11% in the trailing week. From a financial perspective, those that decide to take the plunge enjoy some rational justification.
Objectively speaking, Intel represents an undervalued investment. Currently, the market prices INTC shares at 8.9 times trailing earnings. In contrast, the underlying sector median is 16.1 times. As well, INTC trades hands for 1.19 times book value, whereas the industry median stat pings at 2.15 times.
In terms of growth, Intel presents a solid profile considering that the business suffered heavily from the COVID-19 crisis. For instance, its three-year revenue growth rate of 8.6% stands a bit over the industry median of 8.4%. Notably, though, its book growth rate during the same period is 12.4%, beating out over 60% of the competition.
To be sure, INTC stock isn’t the easiest investing idea to own. However, it’s also more than just a flash in the pan.
