3 Reasons Intel Stock Could Grow in 2017…

Intel Stock, Brian Krzanich, and What to Look for in 2017

The age of the machine is fast approaching. Hardly a day goes by without some new proclamation either celebrating or, in the case of Elon Musk, warning us about the oncoming AI revolution. Possible existential threats to humanity aside, what’s important for investors is which companies will be on the cutting edge of machine development. Intel Corporation (NASDAQ:INTC) is shaping up to be one of those leaders. With the INTC stock price performing well over the past 12 months and the company investing heavily into the next generation of machine learning tech, now may be an opportune time for an Intel investment. Currently the Intel stock price is $36.20, the highest it’s been since the early 2000 tech boom and bust.

If you want to know why Intel stock may be the right pick for you, consider first its competition. Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) both were the stock darlings of 2016, rising 297% and 221%, respectively. While the two companies’ combined market cap is less than half that of Intel, it does show that the chip-making industry is booming, and a large part of that is thanks to the growing influence of machine learning and artificial intelligence.

3 Reasons for an Intel Investment 

Below, I’ve compiled three arguments for why a bull in tech could do worse than an Intel investment.

1. The Trump Bump

President Donald Trump has certainly had one of the most unusual starts to a presidency in recent memory. But the political shouldn’t distract from the potential benefits that companies like Intel—and INTC stock—stand to gain if Donald Trump is able to enact several of the promises he made on the campaign trail.

Chief among those promises was a focus on job creation, lower taxes, and a repatriation deal for large multinational companies (like Intel) to register more of their profits on U.S. soil versus taking advantage of more generous tax rates abroad.

Not to mention that CEO Brian Krzanich recently met with Trump, sparking the revival of an Intel factory in Arizona. The project will cost $7.0 billion and will employ up to 3,000 people, which fits right in to Trump’s economic plan. (Source: “Intel CEO reveals what it is really like to meet with President Trump in the White House,” Yahoo! Finance, February 13, 2017.)

Krzanich told “Mad Money” host Jim Cramer that under the current tax system in the U.S. relative to preferable rates overseas, the factory would roughly cost $2.0 billion more over the span of 10 years.

“The tax plan that the administration is putting forward would drastically reduce that … we are betting on that tax plan coming into fruition,” Krzanich said to Cramer.

“It was a good chance to sit down and talk about everything from immigration, tax reform, our position on diversity and women and underrepresented minorities in the workplace. All of those areas we were able to talk to both the president but also really substantive time with his staff,” Krzanich said.

Between favorable tax changes and an amicable relationship between CEO and president, you have what may turn out to be a boom year for INTC stock. These are, of course, possibilities predicated on Trump’s ability to push through policy despite the mounting political pressures he’s faced in his fledgling administration. Barring any unforeseen developments, Trump and the Republican Congress should be able to pass several business-friendly policies that will positively impact growth on an Intel stock chart.

2. Future Tech 

As previously mentioned, chips makers have already seen their shares rise in value on the backs of potential in the artificial intelligence and machine learning markets. But that’s only part of the puzzle.

And that’s without mentioning Intel’s strides in the Internet of Things, cloud computing, or even how its tech contributed to the drone spectacle during Lady Gaga’s Super Bowl halftime show.

3. Dividends

Not the sexiest reason for investing by a long shot, but dividends are guaranteed returns on investment.

Chart courtesy of StockCharts.com

Intel has positioned itself to be a strong player in future tech if its innovation models can pan out, as IoT, cloud computing, VR, artificial intelligence, and a whole host of other fast-growing industries could choose Intel as the supplier of choice for chips that power these potential technological revolutions.

On the other hand, a savvy Intel investor will also want to know what’s going on in the near term for the company.

Intel has been down slightly in 2017, dropping by about one percent largely due to Brian Krzanich delivering an outlook that revenue will be flat in 2017 as they expect the PC market to continue shrinking, though the rates of that decline have been slower than industry analysts have anticipated. The speed of that decline—or rather, lack thereof—helped fuel a near-25% gain for INTC stock over the past 12 months. (Source: “How Intel Hopes to Impress Wall Street and Boost Its Stock Price,” Fortune, February 8, 2017.)

Despite the outlook and subsequent share hit the company took, Intel Q4 results were strong, with revenue from the data center business rising 8.4% to $4.67 billion in the fourth quarter. Revenue from its PC business grew 4.3% to $9.13 billion. The company also beat analysts expectations in net revenue and earnings per share, while net income fell slightly when compared to the same period a year earlier. (Source: “Data center growth drives Intel’s fourth-quarter revenue, profit beat,” Reuters, January 26, 2017.)

Apple Inc. (NASDAQ:AAPL) made a deal to give about half its business for the “iPhone 7” to Intel, and with the new modem chips it’s making for mobile devices on the way, the company could see even bigger gains in that part of the market. Especially considering QUALCOMM, Inc. (NASDAQ:QCOM), the leading modem chip maker, is currently facing a number of lawsuits and investigations, including one from a major client, Apple.