Why Intel Corporation Hit a 10-Year High

Yesterday evening, chip-giant Intel  (NASDAQ: INTC  ) gave investors a pleasant surprise. Intel boosted its revenue outlook for the second quarter, effectively pre-announcing a beat relative to Street expectations. Revenue should come in around $13.7 billion, give or take $300 million. That's up from the prior guidance range of $13 billion, give or take $500 million. That $700 million boost in the mid-point is well above the $13.1 billion consensus estimate.

Gross margin should also come in better than expected, and Intel is now forecasting revenue growth this year. The company attributed the strength to business PCs, which are seeing healthy demand. That also has implications for Microsoft  (NASDAQ: MSFT  ) , as the current enterprise upgrade cycle is directly related to Windows XP's end of support in April. 

This upgrade cycle, while boosting results now, could still prove short term in nature. Upgrade cycles of this magnitude don't come around very often. Additionally, Intel's rally puts its free cash flow valuation multiples at a premium relative to peers, which implies that investors are expecting sustained growth.

In this segment of Tech Teardown, Erin Kennedy discusses Intel's rally with Evan Niu, CFA.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time, and telling your younger self to invest in Apple? Or to load up on at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play," and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 13, 2014, at 6:33 PM, stretcho44 wrote:

    "as the current enterprise upgrade cycle is directly related to Windows XP's end of support in April. "

    I have seen many people make this XP assumption. What if the XP upgrade assumption is "false"?

    Intel does not define the "PC" the same way that IDC or Gartner define "PC". Intel defines enterprise PC by the type of CPU CHIP and their CHIP pricing on that CPU.

    Everyone has their own definition of "PC" and that is one reason that Intel stopped giving mid-quarter updates several years ago. They got tired of trying to resolve their numbers with the lower IDC and Gartner forecasts.

    I guess we won't know for sure until we see how many XP upgrades there are.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2994131, ~/Articles/ArticleHandler.aspx, 8/31/2015 4:12:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Evan Niu

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.

Today's Market

updated Moments ago Sponsored by:
DOW 16,536.48 -106.53 -0.64%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,777.39 -50.94 -1.06%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 3:56 PM
INTC $28.64 Up +0.22 +0.77%
Intel CAPS Rating: ****
MSFT $43.52 Down -0.41 -0.93%
Microsoft CAPS Rating: ***