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I purchased 1000 shares of Intel (NASDAQ:INTC) yesterday at $21.35. Intel has dropped over a weak 4th quarter earnings report and increased competition from AMD. I expect that things will remain bearish for Intel as the company struggles to introduce its next generation of motherboard chipsets and CPU products. Intel introduced a weak line of multicore processors and the company itself admitted that it was a rush job.

But here's why I see the recent drop in INTC share price as a purchasing opportunity: Microsoft is set to introduce Windows Vista sometime in 2006. With the introduction of Microsoft’s new OS, Intel and AMD should see an increase in demand for new CPUs. Windows Vista posseses the most stringent and difficult hardware requirements of any new OS upgrade that Microsoft has released. The trend is also moving toward dual core processing on the desktop, so while Intel faltered on its first generation of dual core processors, I don’t expect the company to make the same mistake again.

The battle between INTC and AMD reminds me of the GPU battle between NVIDIA (NASDAQ:NVDA) and ATI (ATYT). At a certain point, the share price for both companies rose on demand for new GPUs from a new cycle of game releases and graphics features found in new games. I expect the same thing to occur with INTC and AMD. In response to the new demand cycle triggered by the release of Windows Vista, I see INTC reaching $24.00 in 3-6 months and $26.00 in 6-12 months.

INTC 1-yr chart:

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Source: Why I Bought 1000 Shares of Intel Yesterday (INTC, AMD)