Intel Has Pulled 4 Interim Levers to Reclaim Lost Ground

James Brumley

Mon, Jun 24, 2019, 3:16 AM

There’s no denying it. Intel (NASDAQ:INTC) got lazy, and owners of Intel stock paid the price for it. Rival Advanced Micro Devices (NASDAQ:AMD), largely left for dead, wasn’t dead at all. It was just regrouping. Since 2016 its new chip technologies have thoroughly embarrassed Intel with impressive performance gains at incredible value.

Intel Has Pulled 4 Interim Levers to Reclaim Lost Ground

AMD shares also shamed INTC stock, nearly doubling in price over the last 12 months, while Intel shares lost 4.5%.

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As yours truly suggested near the end of last month though, it would be unwise to count Intel out. It’s got access to some of the best engineers and IP toolkits in the business, and backed into a proverbial corner, it’s starting to leverage them the way it should have several years ago.

In the meantime — even as we wait for Intel’s 10 nanometer processors — the chip maker has pulled several levers, four of which could be game-changers. That is why INTC stock may bounce back sooner than many investors suspect.

Price Cuts

It’s always been something of a dividing line. Though Intel’s CPUs generally offered superior performance, it came at a premium price. Advanced Micro Devices chips also offered acceptable performance, but there’s been no getting around the reality that AMD is the value-oriented provider in the business.

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Intel appears to have finally gotten the wake-up call, though. With the launch of AMD’s next-generation 7nm Ryzen 3000 processors in view, Intel has cut prices on its 8th and 9th generation CPUs, which are the newest CPUs it currently offers. The 10% to 15% price cuts still don’t quite match AMD’s pricing-per-performance metric, but they’re close enough to divert some interest back to Intel’s wares.

One-click Overclocking

For most PC and laptop users it won’t mean a thing. But, for gamers and heavy-duty users that want to push their computers to their maximum physical limits, Intel has released a simple one-click overclocking tool that maximizes the performance of several latest-gen processors.

The company is serious about making this a mainstream option, too. In the past, overclocking as an “at-your-own-risk” effort that usually voided all warranties. Now, for a nominal charge Intel is offering replacement insurance for CPUs that may be damaged by use of its performance maximization tool.

It’s ultimately a means of letting PC and laptop owners squeeze a little more performance out of their investment that AMD doesn’t officially (yet?) facilitate.

Integrated GPUs

For years now, the key to achieving gaming-caliber graphics was to separate computing duties on a motherboard. The central processing unit handles all the hardcore number crunching, but an entirely separate mini-computer called a graphics processing unit (or GPU) attached to the main board handled all the video work. Intel was more than happy, in fact, to punt that part of the computing business to AMD and Nvidia (NASDAQ:NVDA) and focus on CPUs.

Hardware and software have finally caught up with ambitions though. At last week’s Intel Software Technology Day held in London, Intel chief architect Raja Koduri revealed existing and future technologies that could support the heavy video demands of Triple-A games with so-called integrated graphics that circumvent the need for a separate graphics card.

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It’s a development that could make even moderately priced laptop into respectable gaming rigs.

Outperforming AMD

Finally, it’s not exactly a perfect of fair apples-to-apples comparison, but it makes a key point nonetheless. That is, Intel’s soon-to-launch Core i7-1065G7 processor noticeably outperforms the AMD Ryzen 5 3500U processor.

It should. It’s certain to cost more, and the Ryzen in question is not the next-gen 7 nm Ryzen tech that’s slated to be released next month. But, for computer enthusiasts that are trying to balance performance with price, there’s enough of a disparity here to prompt second looks at Intel’s newest option.

Looking Ahead for Intel Stock

They’re all just stop-gaps and stepping stones to be sure. Intel won’t be able to meaningfully push back on AMD until its 7 nanometer tech becomes commercially available in what looks like will be 2021.

But, these are enough high-quality stop gaps to keep Intel stock moving forward at a point in time when neither Wall Street nor Main Street appear interested in seeing any of its upside potential. The current Intel stock price leaves it valued at an unusually low trailing P/E of 10.7 and an equally unusual forward-looking P/E of 10.5. That sets the stage for gains sooner than later, once the market recognizes the company isn’t completely dead in the water here.

As of this writing, James Brumley held no position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.