Why Intel Will Move the Dow Tomorrow

The chipmaker is the next to report in the Dow Jones Industrials earnings parade this week.

Apr 15, 2014 at 12:30PM

The Dow Jones Industrials (DJINDICES:^DJI) on Tuesday gave up a triple-digit morning gain to fall 78 points into the red as of 12:30 p.m. EDT. Although positive earnings reports from Dow components initially lifted the index, positive sentiment gave way to fears about the sustainability of the rally. This afternoon, Intel (NASDAQ:INTC) will take its turn at releasing earnings, and what the tech giant says will have ramifications not just for itself and fellow Dow component Microsoft (NASDAQ:MSFT) but also the blue-chip stocks more broadly.

Intel will release its earnings after the close of trading this afternoon, with past releases coming just minutes after 4 p.m. EDT. The chipmaker has scheduled a conference call for 5 p.m. EDT.

Intc Chip

Source: Intel Free Press, Flickr.

Intel has faced the huge challenge of determining a path forward to make the most of its leadership position. For decades, Intel and Microsoft shared supremacy of the PC market, with Intel processors driving Microsoft software and commanding the business world. Now, PC demand is in decline, and even though emerging-market opportunities still exist for the PC segment, Intel will have to find other ways to make money in order to keep growing.

Intel is following two strategies in an effort to build up its competitive position. On one hand, Intel has built a solid game plan for its mobile-chip business, with a wide spectrum of products that offers viable choices at both the high-end and low-end of the market. With an emphasis on higher-performance tablets that can run Windows operating systems and Windows-based software, Intel is trying to find a niche among business customers, but it is also looking to offer low-cost alternatives for emerging-market-targeted devices where price is the key consideration.


Source: Intel.

Intel's other option is to encourage technology innovation that leapfrogs traditional mobile devices. The budding wearable-technology sector is one such opportunity, with Intel working hard to pioneer new advances that could make existing devices obsolete. If Intel can help create replacements for regular smartphones and tablets, it could leave its competitors in the awkward position of having spent billions in research and development on obsolete technology.

Investors in the Dow Jones Industrials will watch Intel's earnings results very closely. Tech stocks have played a vital role in the five-year bull market, and although the recent weakness in the Nasdaq Composite comes more from high-flying biotechnology and social-media stocks than from old-school tech companies like Intel, many investors would like to see a bounce in tech stocks in order to gain confidence about future market gains. If Intel can give investors the positive results they want, it could lead to a new leg up for the bull market.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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