Over the shorter term, I don’t think Intel is a threat to Qualcomm or NVIDIA since its being equipped in less favored brands. But as Intel grasps greater market share, its upcoming Bay Trail processors could have a chance to dislodge its larger peers. For now, I think Intel is off to a great start, especially since the smartphone industry is expected to grow at a 40% plus rate in FY13.
At the current prices, shares of NVIDIA, Qualcomm, and Intel Corporation (NASDAQ:INTC) trade at forward earnings multiples of 16x, 13.5x, and 10.5x respectively.
The tablet industry is also growing rapidly, and shipments are expected to grow 48.7% in FY13. That a massive growth estimate and Intel seems well poised to take advantage of the growth opportunities. Intel’s Atom processors are being deployed in tablets, especially Windows-based, bringing tablets at par with the performance of low end laptops and ultrabooks. Since most of the Windows-based applications are already tuned to take full advantage of Intel’s multi-threaded cores, I think Intel would be one of the prime beneficiaries from the growth of the tablet industry.
Although Intel has low powered processors for micro servers as well, I don’t think that it could contribute to Intel’s turnaround. However, it would be interesting to see how Intel Corporation (NASDAQ:INTC) can incorporate its upcoming 14nm manufacturing process into its low powered processors, while still being ahead in computing performance. That said, I think Intel is making positive strides, and its triggers suggest that Intel could’ve bottomed out. I think Intel deserves a Buy, rating and investors should keep a close eye on the upcoming Intel Developer Forum at Beijing. And of course, Intel is not for the risk averse.
Piyush Arora has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel and Qualcomm.