Intel should do very well with its PC chip business, in part thanks to its old pal Microsoft Corp. (Nasdaq: MSFT). The steep decline in PC shipments in 2013 slowed considerably this year. Many businesses and some retail customers were forced to upgrade to new PCs when Microsoft ended support for the 13-year-old operating system in April. The PC chip business still makes up 63% of Intel’s revenue.
Investors should also watch for better margins in INTC’s data center business, responsible for about one quarter of revenue. Here, too, the company is reaping the benefit of an upgrade cycle as well as the growth of cloud computing.
The Internet of Things: Intel has wisely targeted this area for future growth. While representing only 4% of sales now, the IoT Group saw revenue rise 24% in the last quarter. More of the same in Q3 would be a very positive sign for future INTC earnings growth. The IoT opens up huge markets for Intel. As the IoT grows, millions of chips will be embedded in objects like wearable technology and household appliances. Business Insider Intelligence estimates that by 2019 the Internet of Things will be double the size of all other chip markets combined.
Intel should also give an update on its stock buyback program.
We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet. And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come.