Correlation between Intel’s and the semiconductor industry’s performances
Intel’s (INTC) performance is directly proportional to growth in the semiconductor industry, given its wide exposure to the PC (personal computer), data center, IoT (Internet of Things), memory, foundry, and other segments.
WSTS (World Semiconductor Trade Statistics) expects the worldwide semiconductor market to grow 1.4% in 2016 and 3.1% in 2017. In 2015, the semiconductor industry’s revenue fell 2.3% YoY (year-over-year), according to Gartner.
Intel’s stock moved in-line with the S&P 500 Index
Intel expects mid-single digit growth in fiscal 2016, with growth expected to pick up speed in fiscal 2H16. As for the first quarter, growth has remained slow as macroeconomic headwinds have continued. Intel’s stock fell 20% between January 1 and February 10, 2016, owing to weak fiscal 1Q16 guidance and a slowdown in the semiconductor industry. The S&P 500 Index fell 11.4% during the same period.
Since February 10, 2016, most semiconductor stocks have picked up growth. The S&P 500 Index has risen 11%, and Intel has risen 12% from February 11 to date. Rivals Qualcomm (QCOM), Advanced Micro Devices (AMD), and Texas Instruments (TXN) posted trends of rises and falls that were similar to Intel’s.
The S&P 500 Index is a good indicator of Intel’s performance. You can gain exposure to the index as well as Intel by investing in the SPDR S&P 500 ETF (SPY). It has 0.85% exposure to INTC, 0.33% to TXN, and 0.43% to QCOM.
About Intel’s stock
Intel has a market capitalization of $150 billion and a PE (price-to-earnings) ratio of 13.66, which is lower than the industry PE ratio of 18.78. The stock is currently trading in the middle of its 52-week range of $24.87–$35.59.
If Intel’s financial estimates come true, the stock has growth potential in the long term.