By Matthew Smith
As the tech industry becomes increasingly competitive, investors may worry about stocks like Intel Corporation (INTC). Based on the recent news surrounding the company, however, Intel still remains a solid investment. It is continuing to improve its products to help it stay at the top of the industry, and I believe Intel's stock will be on the rise for some time to come.
Intel is putting itself in a strong position to move forward, as it has recently announced that it will purchase 1,700 patents from InterDigital (IDCC) for $375 million. These patents relate to 3G and long-term evolution (LTE) technology. This deal should benefit InterDigital, as the company has been struggling to find buyers in recent times. As it has finally sold off some patents, it will appear to be a stronger company, so potential buyers may be able to trust it once again. As a result, I think InterDigital stock should be improving.
Intel is also getting positive attention for this decision though, as this demonstrates that Intel is moving beyond the chip market and getting involved in the smartphone market. I think this is a wise move by the company, as smartphones are becoming increasingly popular. If Intel can take advantage of this large number of patents, it could become a powerful force in this growing market.
The smartphone market is only one place where Intel is growing though. At the recent International Supercomputing Conference, the company announced its upcoming many-core accelerator for high performance computing-Xeon Phi "Knights Corner." Xeon Phi is already receiving positive reports, and these products should help Intel continue to build on its already-successful business.
Companies continue to depend on Intel to contribute to their products, and this will also help Intel remain successful. For example, Intel will be powering Acer's upcoming Aspire Timeline Ultra M5 Series of ultrabooks, which are set for release by the end of June. This is a sleeker, lighter product with a long battery life, and it should be well-received.
Acer is not the only company utilizing Intel technology. Microsoft (MSFT) has revealed a 10.6-inch tablet-the Surface-that will be available in two versions. One will be powered by Intel, and the other will be powered by ARM Holdings (ARMH). There will be some significant differences between these two versions though.
ARM may be in a better position with the Microsoft Surface, as its version is lighter and will be released earlier. An even bigger difference is that the Intel version will run on Windows 8, while ARM's version will run on Windows RT. The impact on these stocks depends on the success of the tablet, Windows 8, and Windows RT. No matter what, however, ARM's version seems to be getting more attention than Intel's version at the moment, so this may not turn out so well for Intel.
Some have noted specifically that ARM is in a great position to benefit from this, as its version has better dimensions to compete with Apple's (AAPL) iPad. Cypress Semiconductor (CY) is also getting attention, as it will be able to benefit from the entirely touch-sensitive screen. Both Cypress and ARM stock should be improving as a result, but it does not seem to be accidental that Intel is not getting the same amount of positive sentiment over this upcoming release. Its version is the less-likely one to succeed, so its involvement will have little effect on the company and the stock.
Other companies may end up contributing to this competition as well. Hewlett-Packard (HPQ) recently previewed its "Gemini" servers, which are going to use Intel Atom processors. There are already rumors that it will eventually "bow to market pressure and deliver real ARM-based server nodes" with its Moonshot products. Hewlett-Packard also plans to use chips from Advanced Micro Designs (AMD) with the Moonshot family of products. This shows how much competition Intel is facing, which makes its improvements even more important. Intel must keep moving forward to prevent other companies from overtaking it. Thus far, it has been doing well, but investors should keep an eye on other companies in this highly-competitive industry.
Advanced Micro Designs is a company that is certainly gaining a lot of attention in the high performance computing industry. It has recently announced that twenty-four of its supercomputers ranked in the top one-hundred on the "TOP500" list. This shows that it has already established itself well in the industry, and it has become one of the leaders in the industry. With increased confidence about its success, more people will likely invest in this stock, leading to increases in the stock price. This should not reduce the effects of the good news about Intel's Xeon Phi products though, so both stocks should be doing well.
Intel does have to deal with another potential issue, however, as some have been claiming that there is a security problem with "64-bit virtualization software running on Intel CPUs." This problem was absent from Advanced Micro Designs processors, but Intel is trying to write this off as an implementation issue. It claims that the Intel processors are functioning exactly as they should and that this is not actually a bug. The security issues will still bring bad publicity to the company though. Even if this is not a bug, it could have a negative effect on Intel.
Intel faces intense competition, and some of its recent news stories have not been very positive. It is still expanding into the mobile market and further developing its Xeon Phi products though. I believe that these are significant enough to make Intel stock go up in price, and I do not yet see much indication that Intel will fall from the top of the industry. This does seem like an industry where things could change quickly though. Although I think the stock will do well in the long term, I would closely monitor the situations of Intel and its competitors, as Intel is certainly not alone at the top of the industry.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.