What's the Deal with Intel Stock?

Estimated read time: 4 minutes

2018 was an up and down year for many companies, including Intel. While Intel has always been a clear leader in the world of computer chips, last year was a bit bumpier than usual.

Intel: A Tech Conglomerate

Intel was founded in 1968 and has been a leader in innovation ever since. Three years after its founding, Intel went public at $23.50 per share. Ten years later the company launched the world's first single-boards computer and first microcontrollers before landing themselves on the Fortune 500 list by the end of 1979.

Intel launched their first processing chip in 1985, allowing multiple software programs to run at once. By 1994 Intel chips were responsible for 85% of all desktop computers. In the decades since, Intel has remained an innovative leader in the world of technology.

As computers have become more affordable more varied since the company's founding, Intel has kept up with and ahead of what is coming next. Even with new competitors, Intel is expected to remain the industry leader and come out strong on the other side of any future downturn within the larger sector. Computers are definitely not going away any time soon, which is job security for Intel, so to speak, long into the foreseeable future.

Challenges for Intel

With such a strong history and a relatively positive outlook on the future of Intel, what's behind the roller coaster ride Intel has been on lately? Intel, like any large company, has faced a few challenges that contributed to a rockier than normal year in 2018.

One of the main challenges facing Intel right now is perhaps self-made. Intel has been slow to the party with their next generation 10-nanometer microchip, and their competitors have capitalized on this delay by offering their own cheaper, better performing alternatives. It's hard to say for sure what is causing the delay, but it's easier to recognize that it has definitely been a challenge for Intel.

Intel launched their first processing chip in 1985, allowing multiple software programs to run at once. By 1994 Intel chips were responsible for 85% of all desktop computers. In the decades since, Intel has remained an innovative leader in the world of technology.

The company is also facing challenges that are out of its control, not the least of which being the United States' trade war with China. With concerns that higher tariffs could be imposed on microchips, Intel has found itself suffering a bit of whiplash as chipmakers rushed to stock up then eased back as talks between the US and China shifted. With uncertainty about the outcome of the trade war, it would be naive to think that Intel won't continue to be affected by this, at least for the time being.

Intel has also been suffering from a lack of consistent leadership, having been on the search for a new CEO for several months now. This missing leader makes it hard for Intel, and investors, to look into the future until someone is in the driver's seat.

Intel's competitors are an increasing challenge for them, as well. As mentioned above, they have capitalized on recent delays and have beat Intel to the punch with their own new products. Some competitors have even gone on to announce more advanced products, leaving Intel somewhat in the dust.

Intel Stock Snapshot

It hasn't been all bad news for Intel recently. Earnings and revenues are up as a technologically advancing world has more and more demand for Intel's products. Despite a rocky 2018, there's no need to write off Intel and sell all your shares just yet.

The highest Intel stocks got in 2018 was $57.08 on June 1st, after steadily climbing for several months. After peaking in June 2018, the roller coaster began and continued throughout the remainder of the year as the challenges Intel was facing became more noticeable.

A month and a half into 2019, Intel stocks have been trading between $45 and a little over $50 so far. Intel is expected to continue growing some, with a one-year consensus target of $56. Once Intel eases concerns by catching up to its competitors, and if the trade war settles between the US and China, Intel stock will likely be more appealing once again.

The Future of Intel Stock

If you are considering an investment in Intel, the company still shows a significant amount of potential to grow. This means it may not be a bad time to go ahead and invest while stock prices are low. Technology isn't going away any time soon, and Intel is likely to continue playing a major role in the industry.

Intel saw slower than normal growth in its Data Center Group during Q4, which the company attributes to fewer Chinese customers and decreased demand from cloud service providers, in addition to enterprise and government customers. Intel projects this decrease in demand to last into the second half of 2019.

The chipmaker is optimistic that an increasing demand for data will ensure they will continue growing. In fact, Intel sold 50% more chips to cloud computing providers in Q3. As cloud computing continues growing, Intel is expected to see growth in its involvement as well.

The company is also boasting a low price-to-earnings ratio currently, despite significant increases in research and development spending. That increase in R&D spending indicates that Intel has their eyes on the future, and if the economy is on their side, they can find the right leader to fill their CEO vacancy, and tensions over a trade war ease, Intel stock is only going to go up.