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Intel (INTC) Unveils Games & Announces Partnerships at E3

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Intel Corp. (INTC - Free Report) recently demonstrated its new lineup of games and technologies and talked about its partnerships with video game developer and e-sports magazine companies at Electronic Entertainment Expo. The company also announced the availability of the new Intel Core X-series processor family.

Pre-order facility for the 4-to-10 core processors will be available from Jun 19 while shipment will start the following week. The 12-core Intel Core i9-7920X X-series processor is expected to start shipping in August. The Intel Core i9-7940X X-series processor, Intel Core i9-7960X X-series processor and 18-core Intel Core i9-7980X Extreme Edition processor are expected to start shipping in October.

The Partnerships in Detail

Intel announced an expanded partnership deal with ESL (an e-sports company). As Global Technical Partner, the company will provide PCs for all participating teams and players and high-performance processors for streaming in all e-sports tournaments of ESL.

The company also announced the Intel Grand Slam for “Counter Strike: Global Offensive” with a prize of $1 million, to be awarded to the first team that wins four “CS:GO” competitions by ESL and DreamHack over a 12-month span.

Additionally, Intel is also moving ahead in the virtual reality (VR) gaming space. It collaborated with ESL and Facebook division Oculus for the VR Challenger League.  Moreover, the company partnered with Ready At Dawn Studios to release “Echo Arena” as a free download for all Oculus Rift owners for three months starting Jul 20.

We expect the partnerships to boost Intel’s footprint in the gaming market amid rising competition from Advanced Micro Devices (AMD - Free Report) , NVIDIA (NVDA - Free Report) and Qualcomm. These along with new product launches will definitely help the stock in gaining momentum going forward.

Notably, Intel has underperformed the S&P 500 on a year-to-date basis. While the index gained 9.9%, the stock lost 0.1% over the same time period.



How is Intel Placed in the PC Gaming Market?

Per Gartner, PC shipments declined for the 10th straight quarter with worldwide PC shipments falling 2.4% to 62.2 million units in the first quarter of 2017. However, the market research firm stated that the scope for long-term profitability in the gaming PC segment is high as the average selling price (ASP) of a gaming PC is significantly higher than a non-gaming PC.

This presents significant growth opportunity for chip-makers like Intel and AMD. We believe that Intel’s focus on high-end gaming PCs is a tailwind over the long run.

Per Jon Peddie Research, the PC gaming hardware market exceeded $30 billion in 2016 and is forecast to witness CAGR of 6% through 2019. One of the reasons cited for this growth is e-sports, which is largely played on PCs because of their user-friendly peripherals.

Also, huge investment in e-sports is a driving factor. Per Newzoo, increasing brand investments have led to growth in the e-sports market, which is most likely to reach $696 million in 2017, growing almost 41.3% year on year. It is anticipated to hit $1.5 billion by 2020.

In such a scenario, Intel’s partnerships with ESL and VR experts like Ready At Dawn Studios are likely to boost its penetration, which will eventually drive top-line growth.

Zacks Rank

Intel currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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