Yahoo Finance

• Intel’s (NASDAQ:INTC) revenue forecast fell short of estimates as the company contends with inflationary pressures and supply issues.

• The company recently acquired a non-chip business that should deliver value to shareholders.

• Investors should keep INTC stock on their watch list and pounce where there’s more clarity on supply-and-demand issues.

Source: Intel

Microprocessor manufacturer Intel’s (NASDAQ:INTC) second-quarter guidance showed the tech icon is not immune to the global issues plaguing most businesses. The company reported better-than-expected first-quarter adjusted earnings of 87 cents per share, while revenue of $18.4 billion came in slightly ahead of estimates.

However, INTC stock sold off in after-hours trading as its revenue guidance disappointed the Street. Management forecast revenue of $18 billion for the second quarter, versus an expected $18.3 billion, citing economic uncertainty and slowing PC demand.

Semiconductor stocks have been struggling in recent months despite chip sales reaching an astounding half a trillion dollars ($555.9 billion to be more precise) in 2021. The sector has been hit by concerns that the chip shortages may turn into a supply glut as demand slows, even prompting one Wall Street analyst to call chip stocks “almost uninvestable.”

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Yet, Intel’s business doesn’t solely consist of semiconductor sales, and a recent acquisition will help to diversify Intel’s business model. Whether this will be enough to move the price of INTC stock higher remains to be seen.

This probably isn’t the ideal time to take a position in INTC stock, but it should be buyable at some point in the future.

Intel Looks to Diversify Amid Chip Challenges

It’s surprising how little coverage Intel’s latest acquisition received. In late March, Intel announced it will purchase Granulate Cloud Solutions Ltd. This Israeli company develops real-time continuous optimization software.

According to the press release, Granulate’s autonomous optimization service reduces CPU utilization and application latencies “by learning the customer’s application and deploying a customized set of continuous optimizations at runtime.” Consequently, users can improve application performance, as well as drive down cloud and data center costs. According to Granulate co-founder and CEO Asaf Ezra, Granulate and Intel “can help customers achieve meaningful cost reductions and five times the throughput across workloads.”

This acquisition should certainly stand Intel in good stead as a more diversified business at a time when the chip industry is under pressure.