For years, tech giant Intel (INTC) has been trying to diversify its business beyond the stagnant personal computer market. The company’s main source of diversification has been the market for data center processors, but Intel also has bet heavily on trying to become a leader in the blossoming Internet of Things (IoT) market. Intel’s IoT business segment, which sells processors and other components into a wide range of market segments such as automotive, retail, and industrial, generated $3.5 billion in revenue in 2018. It’s a successful business.
One way that Intel hopes to continue to build upon that success is by positioning itself to be one of the leading vendors of the chip technology inside of increasingly autonomous vehicles.
Baird analyst Tristan Gerra sat down with Thomas Lantzsch, Senior Vice President & General Manager of IoT, and Jack Weast, Senior Principal Engineer & Chief Systems Architect in the Autonomous Driving Group to talk about where the company is headed in these two areas.
Gerra noted, “In IoT, Intel sees large application potential across a broad variety of verticals including smart cities, retail, industrial, education, and quality control. Edge computing and machine learning will enable autonomous, learning devices, in the many applications where not all data can be sent to the cloud. In Autonomous Driving, Intel provides a full hardware/software solution to customers, rather than just a chip. Intel’s highly proprietary algorithms offer safety by design, not through testing. -Intel currently sources lasers and sensors from tier one suppliers and is working on a fully-integrated solution (camera, lidar, radar, integration system)”
The bottom line: “Intel sees large IoT application potential and rapidly increasing TAM across many verticals including smart cities, retail, industrial, education, and quality control, including for edge computing. In autonomous driving, Mobileye shipments increased over 40% in 2018, with 28 new design wins in 2018; EyeQ5 started sampling in December and has design wins ramping starting 2021.”
Gerra reiterates an Outperform rating on Intel stock with a price target of $64, which implies an upside of 29% from current levels. (To watch Gerra’s track record, click here)
It appears consensus sentiment matches well with Gerra’s eager chip eyes, with TipRanks analytics showing INTC as a Buy. Based on 30 analysts polled in the last 3 months, 16 rate a Buy on Intel stock, 9 maintain a Hold, while 5 issue a Sell. The 12-month average price target stands at $53.69, marking a 12% upside from today’s closing price. (See INTC’s price targets and analyst ratings on TipRanks)