Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Shares of Intel (NASDAQ:INTC) have jumped as much as 3.6% today. The surge instantly repaired the damage that was done to Intel's share price last Thursday, when soft economic reports and weak earnings reports in the tech sector conspired to crush the stock.
I'm not complaining, being an Intel shareholder myself. It's always nice to see your shares soaring, even if it means a higher purchase price for my next DRIP dividend share purchase. For the record, Intel's next dividend check will arrive in a couple of weeks, on September 1, so short-term price swings might actually affect your long-term dividend returns at the moment.
So what did it take to shoot Intel's shares through the roof today?
It wasn't an overall market jump: Intel posted the Dow Jones Industrial Average's (DJINDICES:^DJI) highest overnight jump, and the venerable index is actually down 0.31% in early-afternoon trading.
We're not looking at an overall surge in the semiconductor market, and Intel itself didn't spark today's surge, either. The press roll from Santa Clara is empty, save for the fairly insignificant news that an executive from recently acquired security specialist McAfee got a new job at the Department of Homeland Security. If you're investing in Intel based on nothing but this tidbit, you've got some serious homework to do.
No, all it took to shoot Intel shares skyward was one analyst upgrade. And it's not even a ringing endorsement: Analyst Gus Richard of Piper Jaffray only raised Intel from a "sell" rating to a "neutral" and moved the stock's price target from $20 per share to $22, which is close to this morning's opening price.
Richard's arguments for dropping the "sell" rating are a mixed bag. He says Intel's "Bay Trail" batch of mobile processors looks like a serious player in tablet computers, and I agree with that opinion. But Richard also says Microsoft's (NASDAQ:MSFT) termination of its technical support for Windows XP installations could also be a growth driver for Intel. Specifically, corporate buyers are supposed to flock to Windows 8.1 systems built around newer Intel chips.
Color me skeptical.
The refreshed Windows 8 platform might make a difference in portable and consumer markets. But I haven't seen anything that would convince me to bet on that platform in enterprise-class server systems. If anything, expiring XP support might push corporate clients into the proven Windows 7 platform. The newer version is still designed for touchscreen systems above all else, and it doesn't make sense in corporate workstations or servers.
In the end, this is an empty price boost that will deflate when investors forget about Piper Jaffray's unconvincing upgrade. I do believe that Intel deserves higher prices, but I'd never base my investment thesis on a business-class Windows 8 revolution. Intel's real growth-drivers at this point consist of a late but serious start in mobile computing plus a massive lead in the server market. And Windows 8 has nothing to do with the second catalyst.