Intel's larger segments (Client Computing and Data Center) have recently struggled to grow.
Intel's IoT segment's double-digit growth will take a while to have a significant positive impact on overall fundamentals.
New acquisitions in IoT could help transform the company for the long-term.
Intel (INTC) is striving to transform the company by investing in the IoT (Internet of Things) business segment. Although the IoT segment is growing at a double-digit pace (+12% in the 1st 9 months of 2019), this segment only comprises about 7% of total revenue. The large segments: Client Computing and Data Center (which together comprise 84% of total revenue) experienced slight declines over the same time period.
The global IoT market is expected to grow at a CAGR of 17.56% by 2023. So, it makes sense for Intel to continue leveraging this segment's growth. Intel can consider strategic acquisitions to help accelerate the IoT segment's growth. However, it may take a few years for this segment to be a significant growth driver for the company. So, the company achieve low overall revenue and earnings growth for the next couple of years.
The article is for informational purposes only (not a solicitation to buy or sell stocks). David is not a registered investment adviser. Kirk Spano is an RIA. Investors should do their own research or consult a financial adviser to determine what investments are appropriate for their individual situation. This article expresses my opinions and I cannot guarantee that the information/results will be accurate. Investing in stocks involves risk and could result in losses.
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