Intel Rises on Embrace of Google's Chrome

Intel is leading the Dow Jones Industrial Average by a wide margin today after announcing a number of new Google Chrome-based products.

May 6, 2014 at 3:30PM
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Intel (NASDAQ:INTC) was the only Dow Jones Industrial Average (DJINDICES:^DJI) member company in the green in late trading Tuesday. The chipmaker's 0.36% rise is notable because the Dow as a whole is down 0.64% and tech stocks are leading the slide.

Investors continue to sell off high-priced tech growth stocks, which tends to drag down the overall market. But keep in mind that tech companies that make boatloads of cash are still doing quite well this year, with Intel beating the Dow and Nasdaq overall.

Intel bets big on Cromebooks
Google's (NASDAQ:GOOG)(NASDAQ:GOOGL) Chrome operating system is becoming a major partner in the PC business, a far cry from the Wintel days of the past. That's why today's announcement of a number of Chromebook products based on Intel's Celeron chip, which is derived from the Bay Trail design, is key for the company's future.

The PC has been a drag on Intel's earnings for years, and a move into mobile has yet to play out completely. But Intel could have an advantage over competitors in building inexpensive PCs, and that's where Google's Chromebook comes in.  

Intc Wearable Image

Intel is searching for new growth markets and is putting a lot of effort into wearable devices like this one. Source: Intel.

This isn't going to be a game changer overnight for Intel, but IDC estimated that 2.5 million Chromebooks were sold last year; that number is expected to grow to 4.2 million this year.  

For Google, the addition of more PCs would be a feather in the hat, but for Intel the PC remains a legacy product it wants to protect. Intel isn't winning in mobile the way its executives hoped, and analysts have even called for the company to give up on that sector and open up foundries for third-party designers, as many other chipmakers do.

The win in Chromebooks could be a bridge until mobile or wearable chips begin to contribute a significant amount to revenue and income, which probably won't be until well into 2015. Until then, I'm holding on to shares for the dividend and upside potential of these new products.

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Travis Hoium manages an account that owns shares of Intel. The Motley Fool has no position in any of the stocks mentioned. 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.

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