Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

How Intel Corporation Makes Most of Its Money

By Andrew Tonner - Jun 29, 2017 at 6:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Breaking down the past, present, and future revenues streams of semiconductor giant Intel.

For decades, no other company has dominated the semiconductor industry as much as Intel ( INTC -0.51% ).

Qualcomm and NVIDIA are among the names challenging Intel, and both have grown much faster than their competitor over the past decade. However, if you look at the chip business from a multi-decade perspective, Intel's industrywide clout still shines through:

INTC Market Cap Chart

INTC Market Cap data by YCharts

To get a sense of how Intel achieved this level of dominance and where it plans to go, let's take a more in-depth look at what powers Intel's sales and profits.

What drives Intel's finances

Though the company reports as many as seven divisions, Intel's two largest segments -- the client computing group (CCG) and data center group (DCG) -- contribute the overwhelming majority of Intel's financial performance. Here's a breakdown of Intel's segments by revenue over the past three years.





Client computing group




Data center group 




Internet of Things group




All other




Total revenue




Data source: Intel 10-K filing. Amounts in billions. 

CCG and DCG accounted for 84% of Intel's total sales last year. CCG is effectively Intel's PC and mobile-device chip business. The central processing units (CPUs) the CCG segment makes are the electronic brains carrying out the complex computing tasks that power computers and mobile devices. DCG, in contrast, makes CPUs that are optimized for enterprise-grade hardware, such as data-center servers. 

These two segments become even more important to Intel shareholders when examined in terms of their contributions to the company's operating profit.





Client computing group 




Data center group




Internet of Things group




All other




Total operating income




Data source: Intel 10-K filing. Amounts in billions. 

CCG and DCG contribute essentially all of Intel's operating profit, after deducting the effect of losses in some of the company's smaller segments.

Intel dominates both the PC and server microprocessor markets. In fact, it's common to see estimates of Intel's PC chip-market share as high as 99%. Market-share estimates for Intel's data-center chips, though a bit harder to come by, generally exceed 90%.  

Now let's look to the future of this semiconductor giant.

Laying the foundation for tomorrow

Though the company's current profit profile is attractive for a mature company, Intel's management is eying a grander vision. Over the next few years, Intel plans to reorient its operations to rely less on PCs and better align its revenue model with some of tech's largest trends.

Intel CEO Brian Krzanich recently detailed his company's plans at the Bank of America Tech Conference. During the presentation, Krzanich argued that its current position in the PC and data-center markets, combined with its opportunities in non-volatile memory, mobile, and the Internet of Things, provides the company with an estimated $250 billion total addressable market by 2021. 

A slide from Intel's investor presentation detail its various growth opportunities

Image source: Intel investor relations 

Of course, the company won't capture all of this opportunity. But the point remains that the company's total market opportunity is far larger than its current revenue footprint.

However, in the nearer term, Intel will remain more of an earnings growth story. In the same presentation, Krzanich said the company's management team sees Intel's top line growing in the low single digits over the next five years. However, thanks to growth investments contributing to greater profits, he also sees Intel's operating margin growing faster than sales and per-share profits rising faster than its operating margin.

Putting it all together, investors should expect high-single-digit to low-double-digit growth from Intel over the near to medium term, and those figures could increase slightly in the years to come. Intel is a mature company, so it isn't reasonable to expect much more than that. However, if you add in a decent dividend -- its shares currently yield 3.1% -- the return profile becomes fairly attractive for conservative investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
$49.25 (-0.51%) $0.25
Bank of America Corporation Stock Quote
Bank of America Corporation
$43.87 (-2.27%) $-1.02
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$306.93 (-4.46%) $-14.33
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$176.51 (-0.29%) $0.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.