Intel (INTC) has always done well and this past quarter was no acceptation. The stock has been bullish for 4 ½ months-peaking in early May. Will it continue to move up or is it ready to slow down? What can we expect from the stock through the rest of 2012?
As always, Intel has positioned itself well for the future as it makes a move into new markets. But analysts are not overly enthused about the immediate future of the company's performance. Ambrish Srivastava, PhD, BMO Capital Markets has it rated as market-perform, no different from the rest of its industry. Speaking about Intel's lead in tri-gate technology, he believes the company should have a good year, but competition is heating up for the chip maker.
It is the ARM systems camp that is treading upon Intel country. ARM Holdings (ARMH) and its manufacturing partners, including Texas Instruments (TXI) and Nvidia (NVDA), have talked about taking aim at the notebook PC market with the high-performance and low-power features of their processors. They have a plan to develop chips for desktops and servers in clear challenge to Intel. Intel is already managing a shrinking PC market and moving more and more into the notebook/Ultrabook markets. This competition coming from Arm-based chips in the PC market (where Intel has a more than 80% market share) is going to chip away at its high average selling prices-and this may very well dig into revenue. There are forecasts that Arm-based processors will grab as much as a third of the market for mobile computers by 2015, up from just 8% last year
But it is Qualcomm (QCOM) that is the latest of these ARM partners to talk about taking on Intel. And the feud is on! Smartphones and tablets continue to rise in popularity as access devices to the internet while PCs continue to decline. This inevitably has drawn Intel and Qualcomm together on a collision course. Intel is now marketing its 22 nanometer leading edge processors ("Ivy Bridge") to exceed shipments of its 32 nanometer chips ("Sandy Bridge") by the fall. The chip manufacturer has offered up a boost in performance while reducing power and heat. And it continues to research and introduce new chips for the server market.
So there is a real battle going on between Intel and Qualcomm right now. Qualcomm may have a slight advantage as more and more consumers move toward mobile devices. Between the lower PC sales, fierce competition in the Ultrabook and server markets, and increases in production costs, it is highly possible that Intel could take a revenue hit one of these near quarters and temporarily slow down. If we look at the chart of the company, we can see that the RSI indicator has been signaling a weakness in Intel's move up since the beginning of April. There is a strong negative divergence taking place. Whether this means a temporary lull in upward movement of a reversal of direction we will see.
Based upon what I see developing through these next couple quarters, I believe the company is about to slow its growth for a season.