2018 Off to a Glowing Start for Intel

The chip titan’s comprehensive product portfolio is delivering growth on every front despite a declining PC market. We applaud Intel’s diversification benefits and foresee healthy growth beyond 2018. One area that may concern investors was the latest delay in volume production for Intel’s 10-nanometer process technology. While the firm is currently shipping low-volumes for certain 10-nm products, yield issues that we attribute to defects have once more pushed back the high-volume ramp to sometime in 2019.

Despite the postponement, we endorse Intel’s scattershot approach to address challenges in connectivity (5G), computing (artificial intelligence and cloud), and memory (3D NAND and 3D XPoint). Its string of acquisitions (Altera, Mobileye, Nervana, and Movidius) have unlocked new growth vectors for Intel to tackle.

We are raising our fair value estimate to $62 per share from $56 as we incorporate the new full-year revenue guidance ($67.5 billion versus $65 billion). Shares are currently trading at the three- to four-star threshold, and we believe wide-moat Intel offers a compelling investment opportunity.

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