Will Intel Corporation (NASDAQ: INTC) Continue Dominating Datacenters?

January 24, 2018, 14:53 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Intel Corporation (NASDAQ: INTC) had a stellar performance in the last half of 2017 even as the company’s CEO steered the company away from its core PC market. The company committed fully to growing its datacenter revenues in the midst of the declining global PC market, which generated positive results for the company.

Article Summary

Intel had a stellar 2017, despite shifting focus away from PC chips.

The company recorded immense growth in datacenter and IoT chips.

The company has significant growth potential in driverless car technologies.

Here’s the trading report on INTC.

The company’s third quarter earnings results indicated that the company had come full circle in its transformation journey as datacenter revenues grew by 7% to $4.9 billion, while PC sales remained flat at $8.9 billion on an annualized basis. The company is also investing heavily in new technologies such as artificial intelligence and the Internet of Things whose revenues grew by 23% to reach a record high of $849 million.

The company faces stiff competition from NVIDIA Corporation (NASDAQ: NVDA) in the datacenter and artificial intelligence market, but Intel is a clear leader in the datacenter space as it currently controls about 98% of this industry. On the other hand, NVidia is a clear leader in the PC gaming industry as its PC gaming chips are regarded as being superior to others, which contributed to the 25% revenue growth recorded by the gaming chips last quarter.

Intel also faces stiff competition in the PC chips industry from Advanced Micro Devices, Inc. (NASDAQ: AMD) through its Ryzen processors, which is part of the reason why the company is divesting from the industry. However, it is highly likely that Intel will continue dominating the datacenter market even as the company focuses on growing its market share in the driverless cars industry through its artificial intelligence chips.

The company’s partnership with Alphabet Inc’s (NASDAQ: GOOGL) subsidiary Waymo is evidence of the potential of Intel’s driverless car chips. The success of this partnership is likely to lead to more companies awarding similar deals to Intel in the near future, especially if the Waymo partnership proves successful. NVidia is competing fiercely with Intel in this category.

Finally, there are significant growth opportunities and risks associated with Intel that have been outlined above. As an investor or trader, it is paramount to have the appropriate strategies that allow you to time your entry and exit points accurately in order to minimize risk and maximize your profit potential when trading Intel stock.

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