Intel's shift to server chips business for cars could drive 25% increase in shares

Intel Corp's shift to higher-growth businesses such as server chips and embedded chips for cars could drive a 25 increase in its shares in a year, according to a report on Sunday in the financial publication Barron's.

While there is a risk Intel could cut its financial guidance for the year when the chipmaker reports earnings on Tuesday, it is likely to return to sustainable growth by year's end for the first time in seven years, the publication said.

Investors who do not own stock in Intel should wait until after the earnings call to buy shares, it added.

Intel has struggled to grow as demand for personal computer chips has dried up, Barron's said, but growth in the company's data center group, which includes server chips, could eventually bring in more revenue.

The gap between the two businesses has closed over the past five years.

Last year, the data center business's operating profit was $7.8 billion, slightly below the $8.2 billion earned by Intel's client computing division, which includes chips for desktop and notebook computers. In 2010, the data center division brought in just $4.4 billion, compared to the personal computer business's $13 billion.

Meanwhile, the company's Internet of Things division, which includes chips for cars, medical devices and factories, composed just 4% of revenue last year but is growing at a high-single-digit pace.

Intel shares closed on Friday at $31.46.

Source:Techgig