Intel INTC posted far better-than-expected Q1 results back in April, with sales up 23%. But the chip giant’s shares have moved sideways over the last three months, while the broader tech sector has surged 22%. This might put even more focus on Intel’s upcoming second quarter earnings results that are due out on Thursday, July 23.

Intel Updates

Intel has expanded its reach beyond the PC market into data centers, as semiconductor firms such as Nvidia NVDA and many others compete for their place within the booming cloud computing industry. The firm’s Q1 revenue jumped 23%, driven by a 34% expansion in data-centric sales that were boosted by the coronavirus stay-at-home push. Meanwhile, its PC-focused segment climbed 14% and its adjusted earnings soared 63%.

Despite the blowout quarter, INTC stock has fallen behind the broader tech sector in 2020 and during the market’s comeback. Some investors might have been disappointed to see Intel pull its full-year guidance amid uncertainty—even though many firms did—while others are likely worried about Advanced Micro Devices’ AMD encroachment into its various businesses. Intel also suspended its buyback program, alongside the likes of AT&T T and others.

On top of that, Apple AAPL officially announced in June that it would slowly phase out its 15-year partnership with Intel in pursuit of its own silicon. Intel will still supply Apple with some chips for the next few years and the iPhone maker only accounts for roughly 3% of its revenue anyway. Plus, Intel’s x86 chip architecture is still regarded as superior in the server and PC processor market over the competing ARM-based architecture often utilized in smartphones.

Other Fundamentals

Intel is likely to continue to expand its data-center business because the big-data age is really just getting started. There are, however, near-term concerns about setbacks due to coronavirus uncertainty among enterprise clients, as well as consumer-level PC buyers. On top of that, the PC segment is a more mature market that lacks the growth outlook of other tech segments.

Moving on, investors can see that Intel stock has outpaced the broader semiconductor space over the last two years, up 74% vs. 66%. INTC is also still up 20% in the last 12 months even though it’s done practically nothing during the last three months.

Intel stock sat 13% off its 52-week highs at $60 per share on Friday, which could give it room to run if it’s able to impress Wall Street. Meanwhile, INTC trades at 3.4X forward 12-month sales. This matches its one-year median and marks a discount against its industry’s 4.0X average.

Intel’s 2.2% dividend yield crushes the 10-year U.S. Treasury’s 0.63% and the S&P 500’s 1.78% average. The firm’s next quarterly dividend will be payable on September 1 to stockholders of record on August 7.

Bottom Line

Intel’s second quarter revenue is projected to jump 12.4% to help lift its adjusted earnings by 4.7% to $1.11 per share, based on our current Zacks estimates.

These would both mark slowdowns compared to last quarter. But they do appear solid within the context of the broader second quarter outlook that calls for overall S&P 500 earnings to sink 45% on 10.5% lower sales (also read: Q2 2020 Earnings Season Gets Underway).

Intel is a Zacks Rank #3 (Hold) at the moment and our fiscal 2020 outlook calls for a 1% bottom-line decline on 2.8% stronger sales. This might not inspire enough confidence to make it a strong near-term play, especially amid the uncertainty.

However, longer-term investors might want to consider Intel for its valuation, dividend, and exposure to secular growth trends.

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