Will Intel Get A Boost From Apple?

Intel stock TradersDNA

Intel stock TradersDNA

Will Intel Stock Get A Boost From Apple iPhone business?

Intel, like many other stocks in the United States has had a rough time throughout the first half of 2015. However, some believe that this is likely to change. In a recent research note, one analyst announced that he thinks that Intel may have won as much as 50% of Apple’s iPhone business. Today, we’ll discuss the details of the research note, how Intel’s stock is likely to be affected if this is indeed the case, and what we can expect to see from the stock moving forward.

Intel May Have Won A Big Portion Of Apple’s iPhone Business

On August 12th, Gus Richard, a well known analyst, released a research report that gave investors a reason to be incredibly excited about Intel. In the research report, Mr. Richard wrote that he thinks Intel may have won as much as 50% of Apple’s iPhone business with regard to new models that are due later this year. Here’s what Gus Richard had to say according to Barrons

“Intel’s Modem Wins at Apple: Apple has been evaluating Intel’s modem for a while. We now believe that Intel ill capture roughly 50% of Apple’s modem business in the upcoming iPhones due to launch September 9th. Further, assuming a 50% share of modem business in the new iPhones we estimate that this win could represent $750 million to $1.25 billion in revenue for Intel in CY16.This is a marque win for Intel and would go a long way to reducing the mobile business losses.”

How This Could Affect Intel’s Stock

As any investor would imagine, if this is the case, this could be incredibly big for Intel. While Apple’s iPhone business is struggling to realize the growth that investors expect, it’s still incredibly popular. So, if Intel was to become the provider of modems for Apple’s it could lead to incredible profits. In fact, as Gus Richard wrote, if this were to be the case, Intel could yield as much as $750 million to $1.25 billion in revenue from the deal over the course of the year 2016. No matter how big or small a company is, that’s a massive amount of revenue.

What We Can Expect To See Moving Forward

First and foremost, it’s important to remember in any case like this that this is all speculation at the moment. Neither Apple nor Intel have confirmed this relationship; and considering the secretive nature of Apple, I don’t think that an announcement will come until the new iPhones are released. Nonetheless, Gus Richard is a highly respected analyst; and like most other highly respected analysts, he usually hits the nail on the head with regard to his predictions.

With that being said, I’m expecting that even if Intel didn’t win 50% of Apple’s iPhone business, it likely has won a decent percentage. With that said, two strong trades may become available on September 9th, when the new iPhones are released…

  1. Intel – If it is announced that Intel won this contract, we can expect for it to act as a positive catalyst for the stock; pushing it up in the market. Therefore, call options will likely prove to be profitable.
  2. Apple – Regardless of whether or not Apple chose Intel for its iPhone modems, Apple is likely to have a strong day on September 9th. So, call options will be in order here as well.
Intel Stock 10 years overview

Intel Stock 10 years overview, source Yahoo Finance

What Do You Think?

Do you think Intel won the business from Apple? How do you think the stock will be affected? Let us know in the comments below!